The Value of CEOs – A Recurring Question

December 15, 2009

The Value of CEOs – A Recurring Question

Do CEOs make a difference? For some reason, as the year closes, this one question seems to be a recurring one. The Wall Street Journal just asked and answered this question and Barron’s Most Respected CEOs is out soon. Stefan Stern in the Financial Times writes today about a new study coming out by Morten Hansen of University of California at Berkeley and fellow colleagues at Insead on the performance of nearly 2,000 CEOs at 1,200 public companies over the past 15 years. As Stern reports, the full document will be in Harvard Business Review’s  January (and revamped) issue (www.hbr.org/top-ceos). The report identifies top performing CEOs (think Steve Jobs, John Chambers, Jeff Bezos, Eric Schmidt, etc.) Check out the list. Their basic conclusion, “A CEO can have a great impact by creating a strong team.” Stern’s concluding remarks: “Bosses set the pace and direction, and lead the top team. Their judgment and people management skills are vital. So how important are CEOs, exactly? I admit it. Very.” I would add that CEOs also set the tone. And no surprise that there is no correlation between celebrity and performance. Many of the celebrity CEOs did not make it to the top whatsoever. However, again, I have to ask whether it all comes down to financial performance? Is that the only and best yardstick for being named a best CEO? What about all those other intangibles that are harder to measure – treating employees well, corporate citizenship and diversity? We need a more inclusive measurement of CEO value that takes “society” into account. Isn’t that what all the fuss is about with banks, bonuses and risk?

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Leslie Gaines-Ross
Leslie Gaines-Ross
lesliegainesross@gmail.com

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of reputations.

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