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What Are The Four Characteristics That Predict A CEO?

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CEO’s from left to right: Mark Zuckerberg (Facebook), Marissa Mayer (Yahoo!), Jack Dorsey (Twitter), Phil Libin (Evernote), Alberto Perlman (Zumba)

Boards may be too often swayed by charm when evaluating CEO candidates

New research from the University of Chicago Booth School of Business has identified four factors that predict whether a job candidate will become a CEO and finds that boards often overweight interpersonal skills when hiring a CEO.

In the working paper, “Are CEOs Different? Characteristics of Top Managers,” Chicago Booth Professor Steven N. Kaplan and Copenhagen Business School Professor Morten Sorensen find that how job candidates rate on the four factors of general ability, execution skills, charisma and strategic skills predict their career progression, namely whether they will become a CEO, CFO or other top-ranking executive.

Among the key findings: CEO’s and CFO’s have diametrically opposed scores on these four factors—CEO’s tend to have high scores, while CFO’s tend to have low scores. Also, candidates for jobs other than CEO who score high on the four factors are subsequently more likely to become CEO’s.

The researchers find no significant differences in the four factors among men and women, yet find that women are 28 percent less likely to get hired as a CEO. They also find no differences among public, private equity and venture-capital owned companies.

The CEO candidates who were ultimately hired score lower on execution skills and higher on interpersonal skills than interviewed candidates, leading the researchers to speculate that “boards and shareholders overweight interpersonal skills in making hiring decisions.”

The results have implications for boards choosing CEO’s and for managers aspiring to become a CEO.

The study is unusual in that it is rare to find large-sample, systematic research on what characteristics predict a CEO. The researchers used a data set of more than 2,600 assessments to study 30 individual characteristics of candidates for top executive positions including CEO, CFO, COO and others. The assessments, based on four-hour structured interviews, were performed by G.H. Smart Co., a firm that specializes in assessing top executives.

Source: University of Chicago Booth School of Business

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