When GE replaced Jack Welch there was a three-man race for the position between Robert Nardelli, James McNerny, and eventual successor Jeff Immelt. After Immelt got the job, both Nardelli and McNerney left for the top jobs at Home Depot and 3M respectively.

Research from the University of Texas at Austin suggests that such scenarios are common, with executives who lose out on internal competitions for the top job often finding CEO opportunities elsewhere.

The research, which looked at over 1,500 such CEO competitions that collectively involved 6,393 executives, found that 34% of those who lost out on the job had left their company within a year, with nearly half finding leadership roles in their new company.

“As long as you have talent and experience, not being promoted is not the end of the world,” the authors explain. “The possibility of a promotion is a carrot to work harder.”

Next step

While many executives did find good jobs after being passed over during the initial competition, it would not be right to say this process was not without consequences, however. The study found that executives who were passed over for the top job missed out on pay increases of around 190% on average. What’s more, for those who stayed on, they would have to wait around five years for another shot at the top job, while they also saw their chances of promotion diminish.

That’s not to say that those passed over for the role were lesser candidates, as those people still had skills and experiences that other employers found attractive. The researchers found that those who moved on to other organizations were typically around eight times as competitive as those who didn’t.

“They had many qualities in common with the ones who actually did get promoted,” they explain. “It just happens that they didn’t get the job.”

Moving on up

For these people, the move to other companies coincided with a salary increase of around 33% on average. This compares favorably to those who stayed behind, whose income only grew by 5.8% on average.

The authors believe these findings should offer some reassurance to those candidates who lose out in the CEO contest. What’s more, it also offers some clear opportunities to recruiters looking to attract talent into the C suite.

“Tournaments may work well in terms of motivating people,” the authors conclude. “But in the end, some high-ability executives who are not promoted will leave, because there are better opportunities outside. The external labor market agrees that these are talented people with a lot of good experience that can really contribute to another firm.”