The Path to the Top: An Exploratory Investigation into Process, Situational, and Personal Characteristics Influencing Directors’ Willingness to Appoint a First-Time CEO

Abstract

Selecting a new CEO is a difficult task for any board director ultimately accountable for that decision. It is rendered even more challenging as a result of the shrinking supply of experienced CEOs, which is in part due to the fact that the present generation of baby boomers is approaching retirement age. This unavoidable demographic state of affairs will most likely mean the appointment of a higher number of first-time CEOs (FTCs). Understanding the extent to which process, situational, and personal characteristics influence a director’s willingness to appoint a first-time CEO is key, as it will permit better preparation of both a) board directors and b) CEO candidates, who play crucial roles in shaping the future “corporate North America.” The literature review conducted identifies and categorizes characteristics linked to the selection process, company situational differences, and personal backgrounds of CEO candidates. While the combinations of meaningful characteristics uncovered in the literature are numerous, three guiding propositions are put forth for testing. The methodology selected for this research rests upon one-on-one interviews with 27 corporate directors currently or recently sitting on boards of Canadian-headquartered, publicly traded companies who have experienced a CEO succession event in the past five years. Two initial trial interviews were conducted to refine the interview protocol. Content analysis was used to examine the transcribed interviews and uncover the meaningful characteristics of FTC candidates that were mentioned. Those characteristics were then analyzed against the three guiding propositions to assess their validity and the extent of their influence on directors’ willingness to appoint a FTC.