Summary.At the top of the ladder, the stakes are high and the demands intense. Too many CEOs falter in the job; about a quarter of the Fortune 500 chiefs who leave their firms each year are forced out. Clearly, boards do not always get their hires right.
In conducting an analysis of in-depth assessments of 17,000 executives, the authors uncovered a large disconnect between what directors think makes for an ideal CEO and what actually leads to high performance. The findings of their 10-year research project challenge many widely held assumptions. Charisma, confidence, and pedigree all have little bearing on CEO success, it turns out. Instead, top performers demonstrate four specific business behaviors: (1) They’re decisive, realizing they can’t wait for perfect information and that a wrong decision is often better than no decision. (2) They engage for impact, working to understand the priorities of stakeholders and then aligning them around a goal of value creation. (3) They adapt proactively, keeping an eye on the long term and treating mistakes as learning opportunities. (4) They deliver results in a reliable fashion, steadily following through on commitments.
In Brief
The Problem
Too many CEOs fail at their jobs. From 2000 to 2013, 25% of the Fortune 500 chief executives who left their firms were forced out.
The Cause
One major reason is that there’s a fundamental disconnect between what boards of directors think makes for an ideal CEO and what actually leads to high performance.
The Findings
Findings from a database of 17,000 C-suite assessments reveal that successful CEOs demonstrate four specific behaviors that prove critical to their performance: They’re decisive, they engage for impact, they adapt proactively, and they deliver reliably.
The chief executive role is a tough one to fill. From 2000 to 2013, about a quarter of the CEO departures in the Fortune 500 were involuntary, according to the Conference Board. The fallout from these dismissals can be staggering: Forced turnover at the top costs shareholders an estimated $112 billion in lost market value annually, a 2014 PwC study of the world’s 2,500 largest companies showed. Those figures are discouraging for directors who have the hard task of anointing CEOs—and daunting to any leader aspiring to the C-suite. Clearly, many otherwise capable leaders and boards are getting something wrong. The question is, what?
A version of this article appeared in the May–June 2017 issue (pp.70–77) of Harvard Business Review.
FAQs
The Findings. Findings from a database of 17,000 C-suite assessments reveal that successful CEOs demonstrate four specific behaviors that prove critical to their performance: They're decisive, they engage for impact, they adapt proactively, and they deliver reliably.
What sets successful leaders apart? ›
Successful leaders:
- Motivate and inspire.
- Create relationships.
- Develop a clear, focused vision.
- Promote a coaching culture.
- Never stop learning.
The study identifies the mindsets that helped top chief executives deliver extraordinary impact and summarised them into six key responsibilities: Setting the direction, Aligning the organization, Mobilizing through leaders, Engaging the board, Connecting with stakeholders, and Managing personal effectiveness.
What do CEOs struggle with most? ›
The biggest challenges facing CEOs are staying on top of the ever-changing business landscape, managing their teams effectively, and making strategic decisions that drive growth.
What are CEO Big Five traits? ›
2.2. CEO personality traits and development of hypotheses. Tupes and Christal (1961) and Norman (1963) introduced the five-factor model of personality traits. The Big Five personality traits are (1) Openness to experience, (2) Conscientiousness, (3) Extraversion, (4) Agreeableness, and (5) Neuroticism, in short, OCEAN.
What is the Big Five personality of a CEO? ›
Among the Big Five personality, positive affective traits such as agreeableness and conscientiousness have positive effects on CEO compensation, while the other personality traits, including openness, extraversion, and neuroticism, do not significantly affect CEO compensation.
What is CEO weakness? ›
The greatest weakness of CEOs is their lack of people management and talent management skills, according to a Stanford Graduate School of Business survey of Boards of Directors.
What are 3 qualities that most successful leaders have? ›
Top 3 Characteristics Employee Engagement participants believe the best leaders have: Integrity - Compassion - Determination.
What should a CEO focus on? ›
At the heart of a CEO's role lies the responsibility to make swift and effective decisions – both internal team decisions, and external choices related to the firm's market presence and strategic growth.
What keeps a CEO awake? ›
From technological disruption to global supply chain vulnerabilities, wage pressures, escalating fuel and grocery costs, and the everevolving landscape of ESG responsibilities, CEOs find themselves navigating a complex andinterconnected web of concerns that can keep them awake at night.
Here are the 7.5 things CEOs are interested in:
- Productivity. Productivity has many sides. ...
- Morale and attitude. CEOs understand that attitude dictates morale and morale dictates communication both internally and externally. ...
- Loyalty of customers. ...
- Loyalty of employees. ...
- Competition. ...
- Market conditions/future. ...
- Profit.
A CEO mindset is a key ingredient of successful businesses that is often overlooked by many. It is a limitless mindset. It is a positive mindset. It is the ability of a CEO to streamline processes, delegate and guide their team toward one goal and improve the synergy of their work environment.
What are CEOs biggest fears? ›
Chief executives across the world see the threat of recession and inflation as the top concerns for their businesses this year, according to a survey from The Conference Board.
What makes a poor CEO? ›
Bad CEOs fail to provide the leadership needed to win. They fail to make the difficult decisions and accumulate management debts such as unresolved conflicts, retention of dysfunctional team members or a sense of unfair treatment that undermines their organization's durability.
What do CEOs care most about? ›
Growth is a high priority for most CEOs. A survey by KPMG found that a slight majority (51 percent) of CEOs view growth as more important than achieving cost efficiencies. The study also revealed that nearly half of CEOs surveyed anticipate they'll make at least one acquisition in the next three years.
What are the behaviors of a CEO? ›
The analysis found that they demonstrated four business behaviors: quick decision making, engaging for impact, adapting proactively, and delivering reliably. Botelho cowrote the HBR article “What Sets Successful CEOs Apart.” CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review.
What personality are most CEOs? ›
Agreeable CEOs were linked to flexibility and internal focus. "Although the larger picture suggests that extraversion and agreeableness have the most positive effects on organizational culture, the perfect combination of CEO personality traits does not exist," according to an article on the study from Stanford GSB.
What are CEO leadership Behaviours? ›
Specifically, CEO optimizes human relations among members of the organization through relating and communicating, showing benevolence, and being authoritative (Wang, Yi, and Tsui 2006;Wang, Tsui, and Xin 2011), which plays an important role in improving employees' work skills, motivating employees' work motivation and ...
What CEO behaviors generally lead to success? ›
The CEO behaviors that generally lead to success
Charismatic. Team Oriented. Participative. Humane Oriented.
