It pays to promote CEOs from within, says report

Tuesday, 31 May 2011, 06:20 Hrs
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Dubai: A study of S&P 500 non-financial companies over 20 years (1988-2007) shows that businesses that exclusively promote CEOs from within the organisation outperform companies that recruit CEOs from outside the organisation.

In the international study, 36 companies with CEOs promoted within the company outperformed others across seven measurable metrics: return on assets, equity and investment, revenue and earnings growth, earnings per share (EPS) growth and stock-price appreciation, according to management consultancy A.T. Kearney.

"Middle East companies, boards and company owners very often end up going outside the organisation to fill the CEO top spot. As organisations mature, it is becoming increasingly important to focus on leadership development and creating a pool of internal qualified candidates," said Dan Starta, Partner and Managing Director, AT Kearney Middle East.

"Unfortunately, the stakeholders more often than not pay a big price for this star search." Dan said.
Source: PTI
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