Can awards be bad for companies? Apparently so. Professors Ulrike Malmendier of Berkeley and Geoffrey Tate of UCLA found that CEOs who are hailed as best managers or best performers are likely to witness poor stock performance afterwards. The authors believe that these halo-ed CEOs are probably too distracted from all the glory and public appearances to operate their companies well. They also found that these crowd-pleasers are also more likely to write books and sit on outside boards. Their article, Superstar CEOs, was in the Sloan Management Review.
They included a Warren Buffet quote I had not seen. They used it to show what “real” CEOs should be like. “The best CEOs love operating their companies and don’t prefer going to Business Round Table meetings or playing golf at Augusta National.”
Hard to say if the awards are really the culprit. The business media are also to blame. They are looking for new stories of turnarounds and quick Jack Welches.