Are CEOs Different?

Evaluating leaders and managers is a central concern for companies and their boards. A critical question is how CEOs differ from other top managers. There is much anecdotal evidence and many studies of specific companies and individual leaders, but there is very little systematic evidence about what CEOs look like, how they differ from other top managers, and which candidates are more likely to eventually be promoted to the top spot. In a recent study, drawing on unique data with personality assessments of thousands of candidates, we contrast the types of individuals that are considered for CEO, CFO, and COO positions. We examine who among the considered candidates is more likely to be hired for each position. And focusing on candidates earlier in their careers, we predict who eventually becomes a CEO, CFO, and COO.

In a data collection that has lasted several years, we have processed about 2,600 candidates. We started with candidates assessed by ghSMART, a leading HR consulting firm that has developed a rigorous process using structured interview to classify each candidate’s personality. These assessments are typically performed as part hiring or retention processes, often for the due diligence process of venture capital and private equity firms evaluating investments in the companies. We combined ghSMART’s assessments with information gathered from public searches and other data sources to track each candidate’s subsequent career. The resulting data are unique. They contain a larger number of managers, each assessed using a structured and systematic process, spanning a wide range of companies, a range of positions, and a time period lasting more than a decade.

Each candidate is assessed on about 30 individual characteristics. We use factor analysis, a standard statistical method, to uncover the basic patterns in these characteristics. Our first result is that a candidate’s personality can be summarized by four factors: The first one is “general ability”. Candidates tend to be generally better or worse across the board, and the first factor measures this tendency as the candidate’s general ability. The second factor (“execution versus interpersonal”) is more intriguing. It sorts candidates into, at one end of the scale, candidates that tend to treat people with respect, are open to criticism, have better listening skills, and are better team players, which collectively reflect the candidate’s “interpersonal skills”. At the other end of the scale are candidates who are more aggressive, fast, proactive, and who hold other people accountable, which reflect “execution skills”. Similarly, the third factor (“charismatic versus analytical”) distinguishes between candidates that are more charismatic and persuasive versus those that are more analytical. Finally, the fourth factor (“strategic versus attention to detail”) classifies candidates with broader and more strategic perspectives in contrast to candidates that are more managerial and pay more attention to details.

Using this four-factor classification, we conduct three analyses. First, we contrast the types of candidates that are considered for CEO, CFO, and COO positions. The differences are striking but intuitive: CEO candidates are at one extreme. They have significantly higher general ability (factor 1), they lean more towards execution than interpersonal skills (factor 2), they are more charismatic than analytical (factor 3), and they are more strategic than paying attention to details (factor 4). Interestingly, CFOs are the other extreme, and the signs of their factor scores are opposite those of CEOs. CFOs have lower general ability (factor 1), are more interpersonal (factor 2), more analytical (factor 3), and pay more attention to detail (factor 4). COO candidates tend to fall between these two extremes except that they pay even more attention to details (factor 4).

Second, we find that the candidates’ factor scores are predictive of subsequent career progression. In particular, non-CEO candidates who look more like CEO candidates are, in fact, more likely to become CEOs later in their careers. This provides strong validation for the factor scores.

Third, conditional on being considered, candidates with greater general ability and interpersonal skills are more likely to be hired. In our previous work, we found that general ability and execution skills were predictive of CEO success. The results in this paper combined with our previous results on CEO success suggest that boards overweight interpersonal skills in hiring CEOs.

The complete paper is available for download here.