In search of chief executives who never grow ‘old’

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By naming 53-year-old Janet Truncale as its next global chief executive, EY will hope it can put behind it a nasty bushfire ignited by one rival candidate over the final leadership taboo: old age.

During his campaign for the top job, Andy Baldwin, 57, warned executives discussing his candidacy that they risked breaching age discrimination laws if they made too much of the fact that a four-year term heading the professional services firm would push him beyond 60. That is when EY usually requires its partners to step down.

Sixty seems an absurdly and arbitrarily early age at which to ask executives to hand in their lanyards and badges. Except in the case of a few physically demanding jobs, mandatory retirement also seems an anachronistic throwback. Most countries are obliging workers to toil for longer before they can claim a state pension. Companies are also falling over themselves to become more inclusive.

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Tension is only likely to increase as companies and staff try to reimagine work for 50-year careers. Speaking at the recent Anthropy conference on the UK’s future, Jeremy Hughes, who is helping to develop a new charity aimed at bridging the demographic divide, Intergenerational England, described the workplace as the “key forum where generations come together”. But the workplace is also where generations could come to blows.

The career that Baldwin and his EY peers have had is already hard to imagine for 20-somethings. On the same panel, youth ambassador Ladajah Wilson made clear she did not want to follow the 9-to-5, four-weeks-annual-holiday path of her elders. She preferred a career that was varied and flexible (even if she lamented it would be hard to afford, given what she was set to inherit from the older generation, financially and environmentally). Such “squiggly careers” are ill-served by traditional leadership selection processes.

Age is just a number, they say. But succession planning is dominated by another number: usually, there is only one job at the top. That tempts companies to force change to ease leadership bottlenecks.

Mandatory retirement ages are legal in the UK if they represent a proportionate means of achieving a business aim. That could include freeing up senior jobs or, in EY UK’s case, partnerships for younger colleagues. At a level where men still dominate, it might also serve to meet a corporate goal of greater ethnic and gender diversity.

In the US, mandatory retirement for CEOs is an exception under age discrimination legislation. But an increasing number of big companies have started to abandon or waive their mandates. This year, Chevron dropped its age cap of 65 for chief executive Mike Wirth, now 63, to ensure continuity at the oil and gas company. 

Meanwhile, the average age of US chief executives continues to creep upwards. According to headhunter Crist Kolder, in 2013, the age of CEOs when hired averaged 51.3. It now stands at 55.6

Listed companies do seem more reluctant to keep chief executives well into their seventies or eighties. When I drew up a ranking of global leaders of listed businesses by age in 2011, Warren Buffett, then 80, was only the 16th oldest corporate chief. At 93, he now tops a global league table, prepared by BoardEx for the FT, that contains only two octogenarians. Among US bosses, he is 11 years older than the next oldest in the Fortune 500, Robert Mehrabian of Teledyne Technologies.

Warren Buffett visits the See’s Candies booth and makes a Walnut Roll candy in Omaha
Warren Buffett, aged 93, tops a ranking of global leaders of listed businesses by age © John Peterson/AP

Buffett might seem an exception. But he is living proof that some older chief executives amply justify extending their tenure beyond what used to be considered pensionable age. Capable younger executives ought to be able to rise sooner, too. Only 31 of Fortune Global 500 companies are headed by chief executives aged under 50.

Research has shown that shareholder wealth drops for each year a chief executive ages. Plenty of leaders overstay their welcome because of too tolerant boards or poor succession planning. Another study suggests leaders become more risk averse as they age, with negative consequences for stock performance. Researchers found that was particularly true when the two most influential executives were older. The best outcome might be to pair younger and older colleagues.

I prefer an age-blind approach that does away with age-related stereotypes. It could also help assess the capabilities and potential of younger people like Wilson, if she ever wants to run a multinational.

This is another area where technology could level the playing field. At an FT conference on artificial intelligence last week, Tomas Chamorro-Premuzic, author of Why Do So Many Incompetent Men Become Leaders?, said AI could help humans “focus on the qualities that make people better leaders, while ignoring the noisy signals that make them more toxic and inept”.

The solution to “bed-blocking” by bosses, in other words, is not automatic ousting, based on age, but more rigorous appraisal, based on competence.

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