The CEOs of the nation’s largest companies followed almost identical pathways to the top, highlighting the “parochial nature” of corporate Australia.
A new report by corporate adviser Conrad Liveris found 80 per cent of ASX 200 chief executives attended a sandstone university (such as the University of Melbourne or the University of Sydney), and in almost all cases had also grown up in their university’s respective city.
More than half studied either engineering (27 per cent) or business and economics (25 per cent) degrees, with those studying engineering moving on to project management before taking the top spot, while their business and economics peers typically forged a path through accounting and financial units.
Further, Mr Liveris found that men named Andrew accounted for 7 per cent of CEO roles, while women made up only 5.5 per cent.
“It just highlights the parochial nature of corporate Australia,” Mr Liveris told The New Daily.
“It’s pretty clear which steps people should be taking to get to these sorts of roles.”
While there are exceptions, those who start their careers outside of the traditional pathway tend to fall into the conventional route at some point during their career.
“What this says is that organisations in Australia have a very trusted method for choosing who will lead their business,” Mr Liveris said.
“Each organisation can make these decisions for themselves, and rightly so as they know their business better than anyone else, but it points to a broader trend – These common pathways show there are all these assumptions about who should be a CEO.”
Lack of diversity risks lack of talent
One of the most important decisions of a board is the appointment of a CEO. Just as boards need to work harder to improve diversity around board tables they also need to ensure they are making use of the available talent pool when making CEO appointments. Gender diversity is obviously a critical consideration in this mix.
Louise Davidson, the chief executive of the Australian Council of Superannuation Investors, said the latest figures “show that CEO roles are not representative of broader talent pool and community” could mean well-suited candidates might be missing out on top jobs.
“This is yet another reminder that more work needs to be done on the diversity of management teams,” she said.
“Women represent 50.4 per cent of the Australian population but account for only 5.5 per cent of CEO roles – this immediately raises the question, are we getting the best talent?”
ACSI, which advocates for better environmental, social and governance policies on behalf of super funds and institutional investors, has also been vocal on the lack of diversity throughout businesses and not just at the CEO level.
“While we can focus on a small group of CEOs, more work needs to be done throughout organisations,” Ms Davidson said.
“Work from Credit Suisse, among others, shows a correlation between superior financial performance and the representation of women in management teams and boards.”
Louise Petschler, the Australian Institute of Company Directors’ general manager of advocacy, echoed ACSI’s sentiments, noting that appointing a CEO is “one of the most important decisions” a board of directors (on behalf of shareholders) has to make.
“Just as boards need to work harder to improve diversity around board tables they also need to ensure they are making use of the available talent pool when making CEO appointments,” Ms Petschler aid.
“Gender diversity is obviously a critical consideration in this mix.”