Financial Advice for Retirement, Social Security, IRAs and Estate Planning

Qualifies of Successful CEOs

If you buy individual stocks, you should read the study in the Harvard Business Review. The authors spent years looking into the qualities that are common among successful company CEOs. They found that the qualities most people believe matter really aren’t important. They concluded that four qualities are most likely to lead to success on the job.

Our findings challenged many widely held assumptions. For example, our analysis revealed that while boards often gravitate toward charismatic extroverts, introverts are slightly more likely to surpass the expectations of their boards and investors. We were also surprised to learn that virtually all CEO candidates had made material mistakes in the past, and 45% of them had had at least one major career blowup that ended a job or was extremely costly to the business. Yet more than 78% of that subgroup of candidates ultimately won the top job. In addition, we found that educational pedigree (or lack thereof) in no way correlated to performance: Only 7% of the high-performing CEOs we studied had an undergraduate Ivy League education, and 8% of them didn’t graduate from college at all.

And when we compared the qualities that boards respond well to in candidate interviews with those that help leaders perform better, the overlap was vanishingly small. For example, high confidence more than doubles a candidate’s chances of being chosen as CEO but provides no advantage in performance on the job. In other words, what makes candidates look good to boards has little connection to what makes them succeed in the role.

 

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