Editor's note: This story was updated on Aug. 26, 2019.
The traits that boards traditionally believe make up a high-performing CEO are strikingly different than the traits and skills which actually produce strong top executives, according to a 10-year study called the CEO Genome Project.
CEO turnover can cost companies billions, which drives home the point that picking the right top executive is a high-stakes process. Yet boards typically look for the wrong things in a CEO candidate, according to a new study conducted by the leadership advisory firm ghSmart, in collaboration with researchers from the University of Chicago, Copenhagen Business School, and SAS.
In a Harvard Business Review (HBR) article on the report's key findings, four ghSmart consultants write, "We have seen a fundamental disconnect between what boards think makes for an ideal CEO and what actually leads to high performance."
That disconnect stems from an "unrealistic yet pervasive stereotype" that good CEOs are "charismatic six-foot-tall white man with a degree from a top university, who is a strategic visionary with a seemingly direct-to-the-top career path and the ability to make perfect decisions under pressure," the co-authors write. The reality—according to their research—suggests many successful CEOs stray far from that mold.
The study leveraged 17,000 assessments of C-suite executives, including 2,000 CEOs, which tracked variables such as career history, business results, and behavioral patterns. Researchers identified top-performing CEOs—graded A through C—and examined which traits helped CEOs earn their jobs in the first place.
When the researchers identified qualities that boards valued in CEO candidates—such as high confidence—the "overlap was vanishingly small" with the qualities that correlated with CEO success, the ghSmart co-authors write in HBR.
Ultimately, the study identified four key behaviors that high-performing CEOs tend to demonstrate—and discovered that boards that emphasize those traits during their hiring process improve their chances of hiring a successful top executive.
1. Deciding with speed and conviction
Despite the view that top CEOs are flawless decision makers, the study found it was more important that chief executives' decisions be fast and decisive than that they be perfectly accurate.
Former Greyhound CEO Stephen Gorman explained, "A bad decision was better than a lack of direction. Most decisions can be undone, but you have to learn to move with the right amount of speed." Overall, executives who were described as "decisive" were 12 times more likely to be high performers.
Art Collins, former chair and CEO of Medtronic, said it was also important to be decisive. "Employees and other key constituencies will quickly lose faith in leaders who waffle or backtrack once a decision is made," he said. The ghSmart researchers said this approach was borne out by the evidence, which suggests "that while every CEO makes mistakes, most of them are not lethal."
2. Engaging for impact
High-performing CEOs also tended to keen observers of their organization's key stakeholders and were able to engage those constituencies to push for common business objectives successfully. "In our data, CEOs who deftly engaged stakeholders with this results orientation were 75 percent more successful in the role," the researchers write.
This can be a systematic process. Madeline Bell, CEO of Children's Hospital of Philadelphia, said she makes a "map" of key stakeholders. "I identify the detractors and their concerns, and then I think about how I can take the energy that they might put into resistance and channel it into something positive," she explained. "I make it clear to people that they're important to the process and they'll be part of a win."
Building these types of relationship can be difficult, the researchers say, and high-performing CEOs frequently understand that subtle communication—even body language—helps keep their teams on track. However, CEOs should not necessarily try to be liked by their teams or protect them from tough decisions—behavior that the study found was associated with low performance.
At the end of the day, CEOs need to engage their team and align its stakeholders around common goals—but final decisions on contentious issues should come from the top. Christophe Weber, CEO of Takeda Pharmaceutical, said, "Consensus is good, but it's too slow, and sometimes you end up with the lowest common denominator."
3. Adapting proactively
Successful CEOs also tended to be good at adapting to new challenges. According to researchers, CEOs are 6.7 times more likely to succeed if they excel in this area.
One reason top-performing CEOs adapt more easily is that they tend to spend more of their time thinking about long-term challenges (50 percent) than lower-performing CEOs do (who spend only 30 percent of their time thinking about such challenges). The researchers write, "We believe a long-term focus helps because it makes CEOs more likely to pick up on early signals" by scanning "wide networks and diverse sources of data" which help them "sense change earlier and make strategic moves to take advantage of it."
Moreover, high-performing CEOs understand that changing course will lead to setbacks—and that is OK. "In our sample, CEOs who considered setbacks to be failures had 50 percent less chance of thriving," the researchers write. Meanwhile, "Successful CEOs, on the other hand, would offer unabashedly matter-of-fact accounts of where and why they had come up short and give specific examples of how they tweaked their approach to do better next time."
4. Delivering reliably
This key indicator of high-performance may not shock people. According to the researchers, "the ability to reliably produce results was possibly the most powerful of the four essential CEO behaviors." In fact, the researchers found that CEOs with this trait were 15 times more likely to excel in their role. Specifically, a "stunning 94 percent of the strong CEO candidates we analyzed scored high on consistently following through on their commitments," the researchers write.
A key part of the reliability equation, according to the study, is to conduct extensive research and outreach to stakeholders so that CEOs can define realistic expectations for themselves and their organizations.
Other key factors correlated with reliability were strong planning and organizational skills. High performers frequently "established business management systems that included a cadence of meetings, dashboards of metrics, clear accountability, and multiple channels for monitoring performance and making rapid course corrections," the researchers write. Having a strong team was also critical, but 60 percent of first-time CEOs did not get "the right team in place quickly enough."
Despite the study's findings, the researchers say there is no one-size-fits-all model of a high-performing CEO. Leadership at specific companies need to think critically about the traits which are most important to them.
"In the end, our research shows, leadership success is not a function of unalterable traits or unattainable pedigree," the researchers conclude, but add that "focusing on these essential behaviors will improve both a board's likelihood of choosing the right CEO—and an individual leader's chances of succeeding in the role" (Botelho et al., Harvard Business Review, May-June 2017; McGregor, "On Leadership," Washington Post, 4/17).
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