4 Traits of a Successful CEO

The position of CEO is difficult to fill. According to the Conference Board, roughly a quarter of CEO exits in the Fortune 500 occurred involuntarily between 2000 and 2013. The consequences of these dismissals can be devastating: According to a 2014 PwC assessment of the world’s 2,500 largest firms, forced turnover at the top costs shareholders an estimated $112 billion in lost market value per year. Those results are depressing for directors tasked with the difficult process of appointing CEOs, and intimidating for any leader aspiring to the C-suite. Many otherwise skilled CEOs and boards are clearly making a mistake. The question is, what?

We’ve observed a fundamental divergence between what boards think makes for an ideal CEO and what actually leads to great performance in the more than two decades we’ve spent counselling boards, investors, and chief executives on CEO transitions. The disconnect begins with an exaggerated but persistent stereotype, formed in large measure by official profiles of Fortune 500 executives. It holds that a successful CEO is a charismatic six-foot-tall white male with a top-tier university degree, who is a strategic visionary with a seemingly direct path to the top and the ability to make perfect decisions under duress.

However, we’ve been struck by how few successful leaders we’ve met meet this description. That understanding inspired us to start the CEO Genome Project, a 10-year research project. Its purpose is to uncover the characteristics that distinguish high-performing CEOs (defined as executives who meet or exceed expectations in their roles, based on interviews with board members and majority investors who are intimately familiar with the CEOs’ performance). We dipped into a database built by our leadership advisory firm, ghSmart, which had more than 17,000 assessments of C-suite executives, including 2,000 CEOs, by collaborating with economists from the University of Chicago and Copenhagen Business School, as well as analysts from SAS Inc. Each leader’s career history, business accomplishments, and behavioural patterns are all detailed in the database. We sifted through the data, looking for patterns that separated individuals who were hired as CEOs from those who weren’t, and those who performed well in the post from those who didn’t.

Many widely believed beliefs were challenged by our findings. Our research found that, while charismatic extroverts are generally preferred by boards, introverts are marginally more likely to exceed their boards’ and investors’ expectations. We were also astonished to hear that nearly all CEO candidates have made serious errors in the past, with 45 percent having experienced at least one big professional blunder that resulted in the loss of a job or was extremely costly to the company. Despite this, more than 78 percent of the candidates in that grouping were ultimately chosen for the top job. Furthermore, we discovered that educational background (or lack thereof) has no bearing on performance: Only 7% of the high-performing CEOs we analysed had an Ivy League degree as an undergraduate, and 8% had never attended college at all.

When we contrasted the attributes that help CEOs perform better with those that help boards respond effectively in candidate interviews, the overlap was vanishingly minimal. High confidence, for example, more than doubles a candidate’s chances of being chosen as CEO yet has little effect on work performance. In other words, what makes candidates appealing to boards has no bearing on their ability to perform well in the post.

But the most crucial finding was that effective chief executives have four distinct habits that are critical to their success. We also discovered that focusing on those behaviours in the selection and development procedures improves the odds of hiring the appropriate CEO significantly. And, based on our research and experience, leaders who aim to be CEOs—87 percent of executives, according to a 2014 Korn Ferry survey—deliberately develop those characteristics greatly increase their chances of becoming high-performing CEOs.

The Four Traits

Successful leaders are uncommon in that they excel at all four behaviours. However, as we went deeper into our data, we discovered an intriguing link between the grades our consultants gave candidates when evaluating their fit for a CEO post and their performance on 30 managerial characteristics (such as holding people accountable and motivating a team). Approximately half of the strong candidates (those who received an A overall on a scale of A, B, or C) excelled in more than one of the four important behaviours, but only 5% of the weak candidates (those who received a B or C) did.

The actions we’re about to outline appear to be straightforward at first glance. The key, though, is to practise them with obsessive regularity, which our research shows is a significant issue for many leaders.

1. Making decisions with speed, intent and conviction

In business, legends circulate about CEOs who always appear to know exactly how to drive their firms to wild success. However, we discovered that high-performing CEOs are distinguished not by their ability to make excellent decisions all of the time, but rather by their ability to be decisive. They make decisions sooner, more quickly, and with more conviction. They do so consistently, even in the face of ambiguity, inadequate data, and new domains. People who were described as “decisive” were 12 times more likely to be high-performing CEOs, according to our research.

Surprisingly, the highest-IQ CEOs we work with, those who thrive on intellectual complexity, have the most difficulty with decisiveness. While their conclusions are frequently of high quality, their search of the ideal answer causes them to take too long to make decisions or establish clear priorities, and their teams suffer as a result. These competent but delayed decision makers become bottlenecks, and their colleagues either become irritated (which can lead to valuable talent loss) or overly cautious, causing the entire organisation to halt.

It’s no surprise, however, that when we examined the CEOs who were given negative grades for decisiveness, we discovered that only 6% received unfavourable marks because they made decisions too rapidly. The great majority—94 percent—received a bad score because they waited too long to make a decision.

High-achieving CEOs recognise that making the wrong decision is often preferable to making no decision at all. “A terrible decision was better than a lack of direction,” said former Greyhound CEO Stephen Gorman, who guided the bus company through a recovery. Most judgments may be reversed, but you must learn to move at the proper speed.”

CEOs that are decisive understand that they cannot wait for flawless information. “I have to make a call once I have 65 percent conviction about the answer,” says Jerry Bowe, CEO of Vi-Jon, a private-label producer. They do, however, aggressively seek out multiple perspectives and frequently poll a small, carefully nurtured “kitchen cabinet” of trustworthy advisers who can be counted on for unvarnished advice and solid judgement.

Bowe encourages himself to act on decisions by asking himself two questions: “First, what is the impact if I get it wrong?” and “Second, what is the impact if I get it right?” Second, how much would it slow down other things if I don’t get this done?” That strategy, he claims, empowers his team members to trust their own judgement when it comes to operational decisions, which is crucial in allowing the CEO to focus on fewer but more significant issues.

As a result, effective CEOs also know when not to make decisions. Former Arrow Electronics CEO Stephen Kaufman believes it is all too easy to get caught up in a flurry of decisions. He recommends taking a quick pause to examine whether a decision should be made higher up in the company, or if delaying it for a week or a month will allow vital facts to emerge without causing irreparable harm.

High-performing CEOs, on the other hand, don’t waver once they’ve decided on a course. “Employees and other critical constituencies will soon lose faith in executives who dither or retreat once a decision is taken,” Art Collins, former chairman and CEO of Medtronic, warned us. What if your choices don’t pan out? According to our findings, while every CEO makes mistakes, the majority of them are not fatal. Only one-third of CEOs who were fired over decision-making concerns were fired because they made bad decisions; the remainder were fired because they were indecisive.

2. Engaging for impact

After setting a clear route for the company, CEOs must gain buy-in from employees and other stakeholders. Strong performers, we discovered, strike a balance between a thorough understanding of their stakeholders’ needs and an unwavering commitment to producing business results. They begin by gaining a thorough grasp of their stakeholders’ demands and motivations, and then they motivate employees by focusing on performance and connecting them with the value generation aim. CEOs who skilfully engaged stakeholders with this results orientation were 75 percent more effective in their roles, according to our research.

CEOs who thrive in persuading people to follow them create and execute disciplined communication and persuasion tactics. “I construct a stakeholder map of the essential people who need to be on board with any major decision,” says Madeline Bell, CEO of Children’s Hospital of Philadelphia. “First, I identify the critics and their concerns, and then I consider how I can channel the energy that they may use in resistance into something beneficial.” I make it apparent to everyone that they are vital to the process and that they will be a part of a successful outcome. But, at the end of the day, you must make it plain that you are the one making the decision and that you expect them to join you.”

CEOs like Bell are highly aware of how their moods and body language can affect the impact of their messaging when meeting with stakeholders. Despite the fact that much has been written about “emotional contagion,” new CEOs are frequently astonished by the unexpected consequences of a careless phrase or action. “The organisation will read and magnify every comment and facial expression you make ten times,” adds Kaufman. “If you grimace during a presentation because you have a bad back, the person giving the presentation will believe they’ve been fired.” More than three-quarters of the strong CEO candidates in our sample displayed composure under pressure, which is a job requirement.

CEOs who engage stakeholders do not place a premium on being liked or shielding their employees from difficult decisions. In fact, both of these traits are typical among CEOs who are underperforming. Instead, successful CEOs acquire their colleagues’ support by inspiring trust in their ability to lead the team to success, even if it involves making unpopular or difficult decisions. In the pursuit of business goals, these CEOs do not shy away from conflict; in fact, two-thirds of the CEOs who excelled in engagement were also evaluated as excellent in conflict management. The capacity to deal with divergent opinions appears to aid candidates’ advancement to the CEO’s office.

One of the attributes that jumped out when we looked at leaders who had gotten there substantially faster than the average was their readiness to engage in dispute.

Leaders that are skilled at engagement give everyone a voice but not a vote when dealing with sensitive matters. They listen and encourage feedback, but they don’t make decisions based on consensus. “Consensus is good, but it moves too slowly,” argues Christophe Weber, CEO of Takeda Pharmaceutical. Before making major choices, Weber holds unstructured sessions with 20 to 30 of the company’s top potentials. The purpose of the sessions is to push him and expose him to fresh ideas, but he is cautious not to give the impression that they are democratic.

All of this does not imply that CEOs should act like autocrats or lone wolves. CEOs who “take no prisoners” usually only stay as long as the company is forced to submit to shock therapy. When a company emerges from crisis mode, these CEOs frequently lose support from their teams or board members who have grown tired of the collateral damage. Turnaround CEOs’ careers are usually a series of lucrative two- to three-year stints; they put out the fires and then move on to the next assignment, which is no accident.

Ability to Adapt

We just need to look at the aftermath of Brexit and the recent U.S. presidential election to see how critical it is for businesses and leaders to adapt to a quickly changing environment. According to our research, CEOs that are good at adjusting are 6.7 times more likely to succeed. This is a skill that CEOs have repeatedly told us is vital. “It’s coping with situations that aren’t in the playbook,” Dominic Barton, global managing partner of McKinsey & Company, said when asked what distinguishes effective CEOs. As a CEO, you’re continually confronted with scenarios in which a playbook isn’t possible. You had best be prepared to change.”

Most CEOs are aware that they must divide their attention between short-, medium-, and long-term goals, but the adaptive CEOs spent up to 50% of their time thinking about the long future. Other CEOs, on the other hand, spent an average of 30% of their time on long-term planning. We feel that a long-term perspective is beneficial since it allows CEOs to recognise early warning signs. Highly adaptable CEOs often tap into broad information flows: they scour vast networks and a wide range of data sources for information that may appear unconnected to their firms at first. As a result, they are more aware of change and make strategic decisions to capitalise on it.

Adaptable CEOs also know that failures are an inevitable element of shifting direction, and they use them to learn and improve. CEOs who viewed losses as failures had a 50% lower likelihood of succeeding in our study. Successful CEOs, on the other hand, would give candid explanations of where and why they fell short, as well as precise instances of how they improved their strategy for the next time. Similarly, prospective CEOs with this mentality (what Stanford’s Carol Dweck refers to as a “growth mindset”) were more likely to reach the top of the pyramid: nearly 90% of the strong CEO candidates we assessed scored well on dealing with setbacks.

Reliably Delivering

As banal as it may appear, the ability to consistently deliver outcomes was perhaps the most compelling of the four fundamental CEO traits. CEO candidates who scored high on reliability were twice as likely to be chosen for the position and 15 times more likely to succeed in it in our sample. Boards and investors appreciate a steady hand, and employees have faith in leaders who can be counted on.

Leaders who overlook the value of trustworthiness do so at their peril. At his employer, Simon, a high-potential executive we were asked to teach, was recognised as a miracle worker. He had just delivered 150 percent of his income target in a workplace where surpassing plan by 2% was considered a win. Despite several setbacks in the past, he was now in charge of the company’s main business unit—its crown jewel.

The directors were impressed by Simon’s recent excellent performance when he put his hat in the ring for a promotion to CEO, but they didn’t fully grasp how he’d achieved it, so they questioned it could be replicated. As a result, the board chose a “safer” candidate who had a track record of generating consistent, predictable results year after year.

Our findings back up the value of trustworthiness. We found that a whopping 94 percent of the outstanding CEO candidates we looked at were consistently good at keeping their promises.

Setting reasonable expectations up front is a vital technique here. Reliable CEOs resist the temptation to leap into execution mode in their initial weeks on the job. They look at budgets and plans and talk to board members, employees, and customers to figure out what’s expected of them. Simultaneously, they examine the business to form their own perspective on what is realistic and strive to match expectations with that perspective.

When Scott Clawson came over as CEO of Culligan, the water treatment company, in 2012, he inherited a struggling company with an EBITDA of $60 million, according to everyone. He had to tell investors that the real run rate was closer to $45 million after doing his own due diligence. Despite initial resistance to the lower aim, he went on to overhaul the firm’s business structure and talent, exceeding expectations and delighting his board and investors.

Other strategies were used by CEOs who scored well on reliability. The organising and planning skills of three-quarters of them were evaluated as excellent. They put in place company management tools that included a meeting schedule, metric dashboards, explicit accountability, and various channels for tracking performance and making quick course changes. Above all, they surrounded themselves with capable staff.

Unfortunately, this was not the case for all CEOs: the single most common mistake made by first-time CEOs—committed by a surprise high 60% of them—was failing to swiftly assemble the correct staff. The stakes are enormous for CEOs when it comes to hiring talent, and the failures are clear. The successful ones make a concerted effort to improve their talent. They establish a high bar for themselves and focus on job-related success rather than personal comfort or loyalty, two factors that frequently lead to poor decisions.