The Rubik’s Cube of CEO Search

When a Hospital Board strikes a Search Committee to identify its next CEO, the aim is to get the right candidate into the seat and avoid repeating the search process again in short order. This seems obvious. CEO transitions are time-consuming and the costs of getting it wrong far exceed dollar outlays alone. It’s puzzling, then, that the tenure of almost one in four Ontario hospital CEOs is less than four years.^[1]

Truncated tenures can occur for a range of reasons. There are three that Proximity suggests Search Committees can influence.

• The myth that previous CEO experience hedges the risk of a hiring error.

Given the choice between two equally viable candidates – one with no prior CEO experience or one who has held a CEO role elsewhere – it is often presumed that the latter is the safe bet. Research presents a different story.

According to a 20-year study of the performance of S&P 500 CEOs authored by Spencer Stuart, “First-time CEOs on average lead three years longer and with less volatility in performance [than experienced CEOs]”. Further, for those leaders who held multiple CEO appointments, 70% performed better the first time around than in subsequent appointments based on standard performance measures.^[2]

Another study conducted by pioneering leadership advisory firm ghSMART looked at C-suite executives over a 10-year period. The authors remarked, “Among the more shocking findings in our research: first-time CEOs were statistically no less likely to meet or exceed expectations than those with prior CEO experience.” ^[3],[4]

It is encouraging to note that for 75% of CEOs occupying the top job in Ontario hospitals today, this is their first CEO gig.^[5] Proximity invites Search Committees to continue to dispel this myth.

• The perceived benefits of external candidates relative to internal ones for the CEO role are unclear.

There is no definitive rule of thumb in favour of internal or external candidates for the top job. Favourability towards one or the other often rests on the strategic intention of the hospital looking to the future. As an example, if a Board is pursuing a significant strategic reset with a corresponding organizational restructure, external CEOs may be preferred as they have no internal loyalties and are recruited intentionally to disrupt. Conversely, if a Board is pursuing an evolutionary rather than revolutionary agenda, internal candidates may fare better precisely because of their deep understanding of organizational culture and existing trust-based relationships. Internal candidates also have accelerated ramp up times settling into the role because they are ‘at home’ in the organization.

“For a troubled organization, you’re probably better off with an outsider who doesn’t have prior baggage,” says John Koopman, Partner, Spencer Stuart (Canada). “If it’s a well-run organization broadly successful and achieving its objectives, don’t risk rocking the boat by bringing in a disruptive and transformational figure.”

In Ontario, one out of every two hospital CEOs was recruited from an internal pool of talent.^[6] This speaks to the tremendous work of incumbent Ontario hospital CEOs, supported by strong Governance structures, to identify and ready a pool of exceptional internal talent for the future. More needs to be done, but this is encouraging for the sector.

• “The problem isn’t just that more CEOs are being replaced. The problem is that, in many cases, CEOs are being replaced badly,” says Management Professor Ram Charan.^[7]

Search Committees inevitably begin their process with an intent to cast the net wide and not prematurely exclude or discount viable potential candidates. They achieve this by investing considerable time at the front-end of the process to deliberate the essential attributes for their next CEO until there is consensus.

This upfront, time-consuming work should not be outsourced. In his Harvard Business Review article, Ending the CEO Succession Crisis, Management Professor Ram Charan cautions: “Too often, new leaders are plucked from the well-worn Rolodexes of a small recruiting oligarchy.”^[8] The objectivity of a CEO profile provides the essential guidance to generate the most robust and diverse candidate pool in the best interest of the hospital and avoid the limitations cited by Professor Charan.

Proximity does not suggest that these three areas of influence are the panacea for addressing the challenges of CEO turnover and truncated tenures in the Ontario hospital sector. Rather, bringing them to light directly supports the time-consuming work of Search Committees to get the right candidate into the seat and avoid repeating the search process again in short order.

---

[1] Proximity Institute (2025 October).

[2] Hildebrand, C. A., Anterasian, C., & Brugg, J. (2020). Predicting CEO Success: When Potential Outperforms Experience. SpencerStuart.

[3] Botelho, E. L., Powell, K. R., Kincaid, S., & Wang, D. (2017, May-June). What Sets Successful CEOs Apart. Harvard Business Review.

[4] Botelho, E., & Powell, K. (2018, April 10). The surprising truth about what makes a great CEO. Retrieved from CapX: https://capx.co/the-surprising-truth-about-what-makes-a-great-ceo

[5] Proximity Institute (2025 October).

[6] Proximity Institute (2025 October).

[7] Charan, Ram. (2005). Ending the CEO Succession Crisis. Harvard Business Review.

[8] Charan, Ram. (2005). Ending the CEO Succession Crisis. Harvard Business Review.ative strategic asset. And for savvy board directors, strategic board learning raises their effectiveness in their governance mandate.