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New financial year brings CEO evaluations

Australian companies are ensuring they have strong leadership for the new financial year, with evaluations of CEOs increasing, a leading recruitment agency finds.

CEOChandler Macleod Group (CMG), Australasia’s largest recruitment company, has noted a 30 percent in businesses seeking its expertise in the selection and evaluation of existing and prospective CEOs over the past three months. Australian companies face increased pressure to ensure their leadership teams consist of the best and most appropriately skilled talent as demands for shareholder returns increase following the GFC.

Public company Boards and their CEOs are now faced with new challenges around accountability and performance and the need to optimise growth says CMG’s Executive General Manager for Consulting David Reynolds.

“A number of Boards and CEOs struggled during the GFC, with many caught unprepared and without clear leadership direction to face the tough and demanding environment.  Now that market conditions have improved, there are new pressures as stakeholders expect businesses to gain performance traction in the upturn,” Mr Reynolds states.

“The average tenure of an Australian CEO is around three years but this is largely influenced by changes in major shareholders and economic circumstances so we can expect to see quite a bit of turnover in the next financial year as interested parties place more pressure on organisations to perform.  This is clear from the number of businesses contacting us to ensure they have undertaken due diligence in assessing the capabilities of their current CEOs or potentially sourcing and appointing others more suited to take their business forward,” adds Mr Reynolds.

The evaluation process created by CMG includes business simulations, structured interviews and psychometric testing and should take place at least a year in advance of any CEO contract reviews.