You have a choice between two candidates for the position of new chief executive officer (CEO). One is an introvert, who acts on incomplete information and spends at least 50 per cent of her time thinking about the future.
The other is an extrovert, who has an exceptional IQ that she applies to all decisions, and spends about 30 per cent of her time thinking about the future. Both are very reliable and consistent, but the first had a major career blow up and lost her job. Who are you going to call?
For boards, choosing the CEO is a critical decision. Choosing the wrong CEO is costly. A 2014 PwC study of the world’s 2,500 largest companies found that between 2012–14, 18 per cent of companies forced their CEOs to leave instead of planning for their succession, costing each an estimated US$1.8 billion in shareholder value.
Since the board’s role is to mitigate risk, the second candidate must seem the safer choice. But she is not, according to a new study by a Chicago-based consulting firm, ghSMART.
The study, called the CEO Genome, identified four key attributes of high-performing CEOs. The first candidate matches them all.
For boards, the response to such new data is not to immediately hire an impulsive introvert. Instead, it is to look at what this data reveals about our hiring habits. Surprisingly, the CEO Genome project did not tackle gender.
Hiring “great” decision-makers
If you prefer quality to quantity, it’s time to rethink. The best performing CEOs are not those who make the best decisions, but those who make the most decisions, the study found.
At first glance, this finding appears to contradict the work of noted psychologist Daniel Kahneman, author of Thinking Fast and Slow, and the 2002 Nobel Prize winner in Economic Sciences: that we make better decisions when we don’t make decisions fast. But it appears that getting some decisions wrong doesn’t matter to overall performance.
Fast decision-makers are 12 times more likely to be high-performing CEOs.
How can boards justify hiring a CEO who gets things wrong? The answer is to look beyond their performance in a single company.
Hiring autocrats or democrats
Leaders who are willing to engage in conflict outperform those who seek consensus and those who are autocrats. It is not harmony, but engagement that delivers results.
Too often, the boards of companies in crisis default to hiring autocrats who will make the tough decisions. But when the pressure is off, these leaders find themselves without supporters. Democratic leaders, while popular, are slowed down by achieving consensus.
High-performing leaders set a course and then plan a way to get detractors to buy in to it, the study found. They invite comment and embrace conflict, but don’t pretend to run a democracy.
Hiring “always-there” leaders
A leader who is first in the office and last to leave may seem to present the least risk, but they do not. If your CEO spends half their time at conferences, networking events or with their nose in books and magazines, they are more adaptive to disruption. Change starts on the horizon and leaders who spend time outside the company are first to see it coming. It’s not that leadership is a 9-to-5 job; it’s that adaptive leaders focus on the medium and long term, no matter how pressing day-to-day issues are.
Hiring for brilliant moments
Most leaders achieve great moments in their career; they use them to gain promotions. Hiring a CEO because they led a company to a successful initial public offering or launched a product onto the global market seems like a no-brainer. But it is not moments of brilliance that distinguish the top performers; it is consistency and reliability.
Watch out for leaders who promise a lot, even those who have examples of brilliance to support their case. Look for a leader who delivers on their promises consistently over time. You will recognise them because they set realistic expectations from the start.Habit is the opposite of innovation. By changing hiring habits, boards set their company’s course for adaptation and high-performance.