Some companies are CEO-producing factories. Their track record for preparing people to go on to become CEOs is unmatched. A key reason they are desirable employers for prospective employees is that they can increase the likelihood of ascending to the top of companies.
To understand which firms produce the most CEOs, OnDeck, a company that helps small businesses access financing online, conducted a study using data from LinkedIn. They ranked the Fortune 500 firms that have the highest percentage of ex-employees who are now CEOs.
The top CEO-producing firm is Goldman Sachs (financial services), with 3.65% of the former employees currently holding CEO positions. In the second position is Procter & Gamble (consumer packaged goods) with 3.52% of their former employees sitting in CEOs positions and in third place is Morgan Stanley (3.05%). Interestingly, the fourth and fifth positions are occupied by healthcare companies – Tenet Healthcare (2.79%) and Community Healthcare Systems (2.55%).
Of the top 25 CEO-producing companies, 10 operate within the financial services-related, the most of any industry. Firms that operate within a technology-related industry have seven firms on the list (Cisco, HP Enterprises, Microsoft, Apple, Intel, Adobe, and Oracle), although all but Cisco are ranked toward the bottom of the list. Consumer goods firms produced three companies (Procter & Gamble, Coca-Cola, and Campbell Soup)—all ranking in the top 10. Healthcare produced four firms on the below list (Tenet Healthcare, Community Health Systems, Johnson & Johnson and HCA Healthcare).
The Co-President of OnDeck, Jim Granat, suggests that: “One trend we noticed is that healthcare companies claimed top spots among the Fortune 500 companies on the list. They landed just behind the big names that have historically dominated, which could be a reflection of the continued growth in the industry.”
Christine DeYoung, Managing Partner of DHR’s Commercial Growth Practice, identifies one central similarity of all of the Top 25 Companies. “The companies are foundational training companies. They hire many from the entry level and they train. They are structured to hire best in class talent and generally have strong teaching cultures. They each are leaders in how they recruit, lean into diversity and other key initiatives to improve the business results for the right reasons, and are willing to invest in their people.”
David Wiser, Managing Principal of Wiser Partners, an executive recruiting firm that focuses on functional placements, further noted that all of the CEO breeding grounds fall “into just 4 industries – CPG, Financial Services, Healthcare and Technology. These are industries that are massive, and critical to almost every consumer. This suggests size and scale matters, probably because there are resources – people and money – to leverage every possible product, sales and marketing tool available. Larger companies are also equipped to train and develop their people, and I suspect having a strong foundation leads to more capable leadership later on. In most cases, these are all market-leaders, and strong brands, suggesting there is value in working for a winner. They are also largely consumer-facing businesses, versus Industrial, B2B businesses, where go-to-market plans are generally anchored in better research.”
One noteworthy industry missing from the list is consulting. DeYoung suggests that “it does strike me that great consulting firms that are also rather big-picture strategy focused, such as Bain, who invest in talent and culture, aren’t on this list. I would expect that many of their talented consultants would be strong leaders. However, they have to leave the consulting firms and become mid-level leaders (at other firms) to really learn what the operationalizing of the strategy looks and feels like and its many challenges, including how lead an enterprise-wide team and how to be responsible for the consequences for implementation. Then they can become great leaders poised for more senior responsibility.”
Wiser further suggested that “some of the smartest, most strategic, most analytical people I’ve met come out of Accenture, BCG, Bain, McKinsey, but even they would admit that without practical, hands-on experience inside the client, it can be a very difficult and translation and transition. One other point. Very few of our clients will consider someone coming out of Consulting, for a CEO role, for this reason – the perception that they are great thinkers, but lack the experience of “doing.” This also suggests that there are likely a number of highly skilled and experienced consultants out there who could be successful senior, client-side leaders and CEOs, if they could just get into the game. I suspect most of the CEOs who spent time in consulting, made the move to the client side earlier in their career.”
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