This study examines the decision-making processes surrounding C-suite changes, to help understand the extent to which these processes may help or hinder progress towards greater diversity and equality at board and senior leadership levels.
Since acquisition of corporate entities by private equity (PE) investors is known to trigger more frequent changes in leadership than in other corporate situations and its influence on global corporate structures continues to expand, it was targeted as a critical context for exploring the issue. In-depth semi-structured interviews were undertaken with 23 senior investors from 19 different PE firms, examining how incumbent leadership capability is assessed, how decisions regarding changes to incumbent leaders are made, and how existing approaches might influence leadership equality and diversity.
The findings reveal a common reliance on informal approaches for informing decisions regarding C-suite changes, on subjective and/or anecdotal opinions of leaders' suitability, and an over-reliance on past experience rather than capability or potential when identifying suitable replacements. Evidence of heuristics and biases emerged, including a bias for maintaining incumbent leaders, even in light of concerns regarding their capability or suitability, thereby inhibiting efforts to improve diversity and perpetuating inequality.
This paper explores the decision-making processes undertaken within organisations to determine C-suite changes, a relatively unexplored area, which plays a key role in the upward mobility of a diverse workforce. The study engages directly with decision-makers to examine real-life decision-making situations and explores the findings with reference to theory from occupational psychology and behavioural economics, providing a rich exploration of potential limitations and consequences of current practices for equality and diversity.
