More than half of the UK's largest listed companies are appointing external candidates as their chief executives, a trend indicating significant concerns about succession planning. According to analysis by 25x25, 52 percent of FTSE 100 CEO appointments and 62 percent of FTSE 250 appointments in the year to March came from outside their organizations. This contrasts sharply with peer markets like the S&P 500 in the US (27 percent) and Germany's Dax (23 percent), where internal promotions are far more common.
This reliance on external hires is attributed to companies lacking internal leaders capable of navigating sudden upheavals or repositioning the organization for growth and dealmaking. Boards are often left to look externally because the majority of current FTSE 350 bosses are operators focused on cost reduction and restructuring, and they tend to groom successors with similar operational qualities. This creates a gap when strategic leadership is suddenly needed. The 25x25 report also suggests that a shorter CEO tenure in the UK, averaging five years compared to 7.9 years in S&P 500 companies and 6.2 years in Dax 40 companies, further compounds the problem by reducing the time available for grooming internal successors.
The role of a CEO has become increasingly challenging, marked by economic and political volatility, increased media scrutiny, demanding investor bases, and rapid technological advancements. This pressure leads to a narrower margin for error and a higher likelihood of board intervention. CEO turnover globally reached a new record in 2025, with average global CEO tenure falling to 7.1 years, down from 8.3 years in 2021. This decline is particularly evident in the FTSE 100, Hang Seng, Nikkei 225, and STI. Boards are becoming less patient, and investor activism, which reached record levels, frequently drives CEO exits. Experts recommend that succession planning should be a continuous, long-term process, starting the day a new CEO begins their tenure rather than being an afterthought during crises.
