value insights

Nice Guys Finish First- Valutrics

Bottom Line: When hiring CEOs, companies appear to focus on interpersonal skills while overlooking the candidate’s capacity to get the job done.

Nice guys finish last, the old sports adage goes. But according to a new study, nice guys finish first in the race up the corporate ladder. And yes, it’s usually guys who emerge victorious. Hiring committees tend to disproportionately value candidates’ interpersonal qualities, the authors found, and elevate far fewer similarly credentialed women than men to the CEO role.

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The authors analyzed a proprietary database containing comprehensive assessments of more than 2,600 candidates for top management positions at both public and private firms, ranging from well-funded startups to companies that take in more than US$1 billion in annual revenue.

The evaluations, collected between 2000 and 2013, were based on four-hour interviews that resulted in a 20- to 40-page report on each candidate. These reports traced the candidates’ actions and behavior through their childhood, college years, and professional careers. Along with demographic information, each final report contained a detailed breakdown of how the candidate rated on 30 personal and professional characteristics. Investors, boards, and HR executives use the database to evaluate potential hires for top management positions, including CEO, CFO, and COO.

The authors found that candidates’ traits could be grouped according to four overarching categories: talent for management, ability to execute tasks, charisma, and strategic and creative thinking.

Candidates who were immediately hired for the open CEO positions tended to score higher across the board, the authors found, compared with their colleagues who were vying for lower executive slots.

Scoring high on the four factors also predicted a candidate’s future career advancement. Candidates for positions other than CEO who scored higher across the board were more likely to become CEOs down the road, the authors found. This finding indicates that certain executive traits and talents can both be detected and remain constant throughout an individual’s professional development.

Certain executive traits and talents can both be detected and remain constant throughout an individual’s professional development.

But although men and women didn’t have huge scoring differences, the authors found that women who were rated similarly to men were about 28 percent less likely to be appointed CEO, underscoring how wide the gender gap remains at the upper echelons of companies.

In another interesting finding, the authors determined that people hired as CEOs scored much higher than other candidates on their interpersonal qualities — willingness to listen, readiness to be part of the team, and receptiveness to criticism, for example — and lower on execution skills, which include efficiency, proactive leadership, and persistence. But that suggests personality can outweigh credentials, metrics, and a track record. Search committees should endeavor not to place too much value on charisma. They should focus on a candidate’s ability to get things done and keep subordinates on task.

Source:  “Are CEOs Different? Characteristics of Top Managers,” by Steven N. Kaplan and Morten Sorensen, Columbia Business School Research Paper No. 16-27, Feb. 2016