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Leading Northern Ireland firms opting to hire new chief executives from within their own ranks

Businesses in province steer away from the trend of their UK counterparts who look outside when recruiting CEOs

By Margaret Canning

Published 20/04/2016

Richard Ennis of sponsors First Trust Bank and Paul Terrington, chairman of the IoD NI, present Colin Coffey of Flint Studios (centre) with the non-executive Director of the Year award, sponsored by Invest Northern Ireland, at the 2016 IoD NI First Trust Bank Director of the Year Awards ceremony
Richard Ennis of sponsors First Trust Bank and Paul Terrington, chairman of the IoD NI, present Colin Coffey of Flint Studios (centre) with the non-executive Director of the Year award, sponsored by Invest Northern Ireland, at the 2016 IoD NI First Trust Bank Director of the Year Awards ceremony

Major Northern Ireland companies Wireless Group and Danske Bank bucked UK trends when they hired new CEOs from inside, new research suggests.

Business advisory firm PwC said UK companies are now more likely to choose a new chief executive from outside their company.

But they are also more likely to force an under-performing leader out when times get tough, according to the annual CEO Success Study, from PwC's strategy consulting business.

Paul Terrington, PwC's regional chairman in Northern Ireland, said boards should make sure they "build a bench of strong, internal candidates".

But external candidates could be useful for making big changes, he added.

"When the company needs to make transformational changes boards should also factor the outsider option into their succession planning."

In November last year, Danske Bank announced the departure after eight years of chief executive Gerry Mallon, who's taking up the top position in Ulster Bank in the Republic of Ireland.

Mr Mallon, who takes up his new job in Dublin in June, was replaced as chief executive by his deputy, Kevin Kingston.

And UTV Media plc - now known as Wireless Group plc - announced the retirement of John McCann after 16 years as chief executive.

He'll be replaced when he steps down next month by company chairman Richard Huntingford, who will be known as executive chairman.

PwC said the boards of major businesses should always have the right people in place to help prepare for the future.

Mr Terrington said: "Companies in Northern Ireland, regardless of ownership and size should make succession planning a boardroom issue and should regularly assess the performance of internal candidates for a potential CEO role.

"Whether a new leader comes from inside or outside the organisation, companies that plan for CEO succession most carefully are more likely to be better performing companies in general."

But PwC said that over half of all chief executive appointments in the UK during 2015 had been external hires - well above a four year average of 40%.

However, only 23% of firms worldwide had appointed someone from outside their organisations during 2015.

But hiring a newcomer did not appear to be paying off for UK firms, according to PwC. In the last four years, nearly 30% of external CEOs who left the company had been forced out, compared to just under 20% of internal CEO hires.

CEO turnover is also at a record high in the UK, at 19.3% in 2015 (2014: 18.3%). Only Brazil, Russia, India and Japan had a higher CEO turnover rate than the UK last year.

PwC's research comes as Northern Ireland's top company directors were recognised by the Institute of Directors (IoD).

Mark Nodder of Wrights Group was named large company director of the year, while Brendan Mooney of Kainos was named mid-market director of the year.

Paul McElvaney of Learning Pool was SME director of the year, while Colin Coffey of Flint Studios was named non-executive director of the year.

Belfast Telegraph

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