The Swiss economy is more reliant than ever on foreign executives

© Keystone / Georgios Kefalas

From CEOs to board members, Swiss companies can’t get enough of outside talent for their top jobs as long as they are not ‘too foreign’. 

According to the soon to be published 2023 edition of Heidrick’s global CEO study “Route To The Top”, the percentage of non-national CEOs of the companies in the Swiss SMI Expanded index is 47%. This is almost double the 25% global average.  

Some of the more well-known foreign imports include American Vasant Narasimhan of Novartis, Swedish Björn Rosengren of ABB, Italian Mario Greco of Zurich insurance and Dutch Hanneke Faber of Logitech.  

But the Swiss economy’s appetite for foreign executives extends beyond just CEOs. Foreigners also account for 47% of executive board members and 56% of senior management appointments in the 100 largest Swiss companies, according to the 2023 Schilling Report compiled by recruitment firm Guido Schilling. This is an all-time high.  

The foreign executive board members hailed from 39 countries (compared to 30 the previous year) with 63% having already worked in Switzerland or for a Swiss company before.  

New markets and gender quotas 

According to Marion Fengler-Veith, Partner-in-Charge Switzerland at executive search company Heidrick & Struggles, it should not be surprising that the proportion of non-national CEOs in Switzerland is higher than in other countries because Switzerland is a small country with a limited talent pool but is home to a large number of internationally active companies.  

“In addition, these companies need managers and specialists with knowledge of their target markets (e.g. USA, Asia) or, as part of diversity & inclusion efforts, even more female CEOs, who are also not to be found in unlimited numbers in Switzerland,” she told SWI swissinfo.ch by email.  

In 2020, the Swiss government made it a legal requirement that women should make up at least 30% of the board of directors and 20% of executive boards of large companies from 2026 onwards. Perhaps this can explain why the proportion of foreign female board members (54%) is significantly higher than their male counterparts (45%).  

“The SMI [Swiss Market Index] companies operating in the global market benefit from a completely different self-understanding regarding the reconciliation of family and career in many countries. In the past two years, they have been able to recruit outstandingly qualified female managers around the globe for their executive board teams,” says Schilling. 

‘Liability of foreignness’ 

“Foreign CEOs are more likely to respond to market pressures and investors. They are less rooted in the company and need to have an eye on the ball to sustain performance,” says Winfried Ruigrok, a professor of international management at the University of St. Gallen.  

However, this focus on international markets and investors is not appreciated by all. On Friday, Novartis CEO Vasant Narasimhan was criticised for skipping a press conference of the company’s results meant for the Swiss press for reasons of efficiency.  

“Instead, the American found time the same morning to provide information to investors and analysts from all over the world. Perhaps, probably, almost certainly, Narasimhan’s absence from the media event is a strong indication that the head of Switzerland’s third-largest company does not consider the domestic market to be all that important. In fact, Novartis earns most of its money in the US,” wrote the Tages Anzeiger.  

According to Ruigrok, even CEOs are not immune from the “liability of foreignness” that applies to all outsiders trying to make their mark in the Alpine nation.  

“Companies want the fresh ideas and superior insights in accessing new markets that a foreign CEO may bring but at the same time companies want the foreign CEO to integrate and connect,” he says. “The more foreign they are the less likely they are to be able to transmit their ideas and insights to the organisation.” 

The Dutch national has a piece of advice for Swiss companies looking to hire foreign CEOs. 

“It is best to hire a foreign executive one level down from the CEO, let them get to know the company and then promote them to the top job,” he says.