To be a great CEO, get things done (at all costs)

That seems to be the lessons of a study published by the NBER, where the authors try to identify the characteristics of successful CEOs :

(..)success and performance are more strongly correlated with execution-type skills than with interpersonal and team-related skills. In other words, CEOs like Jack Welch appear to be more successful than CEOs like Jeff Immelt. This is consistent with other researchers’ results (in non-CEO contexts) showing that steadfastness — and traits such as unwavering resolve, fanatical drive, and workmanlike diligence — is more important than being a good listener. The authors’ findings are also consistent with results in the psychology literature that suggest that “conscientiousness” is the best predictor of performance, but they do not support previous findings that successful CEOs exhibit compelling modesty, build strong teams, give credit to others, and take blame on themselves.

Finally, the authors point out that their results reflect buyout and VC-funded companies only. While these are two quite different groups, these types of companies may have specific needs and, therefore, the results may not generalize to all companies. Second, the performance data are coarse and potentially “noisy.” But, that said, the authors’ results correlate strongly with Peter Drucker’s description of the effective executive. The attributes Drucker describes are largely execution-related and appear to correspond well to the “efficient,” “persistent,” “proactive,” “commitment,” and “analytical” skills in this study.

Steven N. Kaplan, Mark M. Klebanov, Morten Sorensen. Which CEO Characteristics and Abilities Matter?   NBER Working Paper No. 14195)

Posted in Business | No Comments »