When a company changes its chief executive, the decision carries enormous consequences. Yet a recent study indicates that corporate boards are not necessarily getting better at the task, even when they have prior experience. In 2024, CEO turnover hit an all-time high, with over 2,220 leaders stepping down. This wave of leadership changes prompted researchers to investigate whether repeated exposure to CEO selection improves a board’s ability to choose high-performing leaders. Their findings, published in the Strategic Management Journal, suggest that this assumption does not hold.

Rich Gentry, chair and professor of management at the University of Mississippi, explained the surprising results: “Most people improve with practice, but we find that this doesn’t hold true when it comes to directors selecting new CEOs, despite the high stakes. Directors with more prior experience in CEO hiring do not consistently select better-performing leaders. In fact, there is some evidence they might actually perform slightly worse.” Gentry collaborated with Steven Boivie of Texas A&M University, Inn Hee Gee of the University of Oklahoma, and Scott Graffin of the University of Georgia to examine CEO appointments in S&P 1500 firms between 1999 and 2020, covering a broad range of company sizes and industries.

The researchers attribute the problem to the inherent complexity and rarity of CEO hiring. As Boivie noted, “Hiring a CEO is very difficult, and it is almost impossible to know in advance who would be the perfect fit. Because of that difficulty, it is easy for boards to overinterpret their prior experiences and to believe they should copy those same patterns.” This tendency, they argue, can lead to overgeneralisation, where boards rely too heavily on what worked in the past without recognising that each company’s circumstances are unique. By acknowledging the limitations of experience, directors may be able to avoid repeating mistakes.

The stakes are particularly high because CEOs are tasked with managing both short-term and long-term performance. Kodak’s history provides a cautionary example. Its CEO championed digital photography—a forward-looking move that would later prove strategically sound—but the decision was criticised at the time for damaging short-term profits. The company ultimately filed for bankruptcy despite its technological foresight. Conversely, Microsoft’s board saw strong returns after appointing Satya Nadella in 2014. His push into cloud computing revitalised the company, delivering both immediate profitability and sustained growth.

To evaluate hiring success, the team analysed CEO performance metrics adjusted for industry norms and the company’s condition at the time of the appointment. They found that having served on a previous CEO hiring committee was not a reliable indicator of better future outcomes. Gentry referred to this as “superstitious learning” — the belief that having done something before automatically translates into expertise. In reality, most directors face the task of hiring a CEO only once or twice in their careers, offering too little repetition to build meaningful skill in such a rare and complex decision.

According to Gee, the main takeaway is that boards should avoid relying too heavily on past hiring experience. Instead, they should treat each CEO succession as a unique, context-specific challenge, guided by structured evaluation processes and informed by multiple perspectives. Gentry added that boards might benefit from more systematic support—such as formalised assessment tools and external expertise—to reduce bias and avoid overconfidence. The study ultimately suggests that accumulated experience alone is not enough; thoughtful, evidence-based decision-making is essential for selecting leaders who can thrive in both the present and the future.

More information: Steven Boivie et al, Do boards learn to hire? The effect of board experience with CEO replacement on CEO performance, Strategic Management Journal. DOI: 10.1002/smj.3725

Journal information: Strategic Management Journal Provided by University of Mississippi