The Horse Race As a Selection Process for Company CEOs
In horse racing, a horse race is a contest between multiple contenders to determine the best overall winner of an event, typically a multi-race series. The term derives from the days when professional riders, called jockeys, demonstrated the top speed of a horse by racing it for potential owners. These races were often short, ranging from a quarter to a mile, and took place on open fields or roads. These early events were a precursor to modern Thoroughbred horseracing, which began in medieval England when nobles and aristocrats employed skilled riders to compete on their behalf.
Today, a horse race is generally a competitive event involving several high-level executives, all competing to be named company CEO. While some critics argue that an overt competition for the top job can create a culture of distrust and mistrust, proponents point to the fact that the selection process is meant to ensure that the best overall executive will be selected. Further, they say, the fact that multiple executives are able to compete for the role indicates that the board and company have invested in developing its people through functional assignments, training, and stretch opportunities. The idea of a horse race is also appealing because it allows the company to retain its top talent while offering employees a clear career path into senior management.
However, the use of a horse race to select a company’s next leader should be weighed against its costs and impact on business momentum. A prolonged succession horse race can drain the energy of the organization, and if it is not conducted carefully, may result in the loss of key leadership in other parts of the company.
As a result, some companies choose to limit the length of the contest. The boards of those that take this approach are sensitive to the impact on their organizations’ business momentum, and strive mightily to limit the duration of the contest. They are concerned, in particular, that an overt competition for the top job will cause a loss of internal focus and that the company may lose the support of executives deeper in the organization who had aligned themselves with a competitor.
Moreover, in some cases, the horse race may have negative impacts on animal welfare. For example, the recent postmortem examination of the injured thoroughbred Havnameltdown revealed the presence of corticosteroids and sedatives in the horse’s body. The findings are alarming to horse racing outsiders who believe that these drugs are not appropriate for use on animals.
Similarly, the longstanding reciprocity of breeding programs across national boundaries was broken in 1913 with the passage of the Jersey Act, which disqualified horses from races in England that had won at prestigious European races by horses with “tainted” American ancestry. This policy was enacted largely in response to a rash of victories by American sprinters. The Act was subsequently rescinded in 1949.