Inside The Mind Of The Chief Executive Officer

Inside the Mind ofthe Chief Executive OfficerRussell Reynolds Associates’ Inside the Mind of series addresses the leadership and behavioralattributes of various groups of executives.

2ContentsExecutive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Our framework and methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4What is the unique psychology of a CEO? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5CEOs: a breed apart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Do CEOs conform to common “CEO stereotypes”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Best-performing CEOs: purposeful, substantive, down-to-earth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8CEOs of public companies: deliberately understated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9CEOs who were internally promoted: quietly digging in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10What's next for CEOs? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3Executive summaryLeaders at the very top of organizations are distinguished by threekey traits: initiative (taking first-mover action), inference (coming tounderstanding on limited information), and influence (persuasively movingothers to action).Our psychometric study of more than 900 CEOs reveals that CEOsmanifest a markedly different psychological profile from the averageexecutive, characterized by a courageous, fast-paced nature as well asoriginal thinking and active engagement of others.Some common CEO stereotypes (persuasiveness, aggressiveness) are borneout by this psychometric data, while others (lack of warmth, self-promotion)are not.Best-in-class CEOs show greater humility, sense of purpose, and focus onsubstance than their peers.Public company CEOs and CEOs who were internally promoted both showsurprising introverted traits when compared to their CEO peers.

4Our framework and methodologyThe Center for Leadership Insight’s “Eyes on the I’s” framework characterizes what’s needed for leaders at the top of organizations.Great leaders in the coming decades will embody the following traits, which we highlight throughout this paper as they manifestthemselves in our results.INITIATIVEINFERENCEINFLUENCEUsing first-moveradvantage to shapeunpredictablesituations intopositive resultsUsing the power ofdeduction to assembleunderstanding fromvoluminous, incomplete,or divergent dataUsing the powerof persuasion to stirdiverse stakeholders tomotivated actionMETHODOLOGYThe Russell Reynolds Associates database—unique in that it contains6,000 psychometric profiles of executives from the top ranks of corporationsworldwide—allows us to make statistically driven observations about thecharacteristics possessed by leaders in a particular field.Our methodology was straightforward: Using results on three well-validatedpsychometric instruments (the 16pf, the OPQ-32, and the Hogan DevelopmentSurvey), we compared over 200 CEOs whom we have assessed around the worldto our broader database of senior executives, and we conducted comparisonswithin this group as well to better understand what statistically significantdifferences emerged across our 60-attribute psychometric model. We validatedthe data from our CEOs with a sample of over 700 CEOs whose psychometricdata had been collected by our partner, Hogan Assessment Systems, to ensurethat the results were robust and generalizable.“Listening and askingquestions createsengagement. Trueengagement withsubsequent actionand empowermentcreates inspiration.That's influencing.”—S tephen Smith, president andchief executive officer of L.L. Bean.

5What is the unique psychology of a CEO?We began this study with a simple question:Psychologically, are CEOs that different from the average executive?Our findings are clear:YES, they indeed are.CEOs differ from other executives across MANY traits andon some traits to a LARGE degree.This paper thus has three goals:123Illuminate the genuinely unique psychology of the CEO –including to what degree common CEO stereotypes are borne out.Unpack the hallmark traits of “best in class” CEOs.Provide a “field guide” to the psychology of CEOs with differing backgroundsand experience.

6CEOs: a breed apartOn a psychometric basis, CEOs differ meaningfully—across many personality attributes—from the overall executive population.Two traits in particular stand out because of the magnitude of the difference from population averages—embracing the right risksand capitalizing on opportunities. These traits, which make CEOs courageous and fast-paced, can be considered the essence of theCEO personality. The ability to mindfully take action without hesitation truly separates them from others.CEO essence (statistically significant differences of highest magnitude)Courageous and fast-pacedSeek challenge, not intimidatedINITIATIVE6.65.4Embrace the right risksCapitalize on opportunitiesSix other groups of traits also distinguish CEOs from their executive peers on a statisticallysignificant basis:Driven and resilientAmbitious, intrepid, resilientTeam buildersHigh EQ; read, engage, and organize othersINITIATIVE6.06.5Competitive Self-assuredAchievement-orientedEmotionally stable CalmStrong in their convictionsOriginal thinkersCurious, develop a unique point of view5.05.5INFLUENCE5.2INFERENCEVisualize the futureForward-thinking, forward actionInclusive Read others effectivelyTeam-oriented Rely on othersWarm TrustingEnjoy others’ companySend clear messagesCommunicative and open5.7Independent-thinkingOpen to change ImaginativeInnovative Conceptual thinker5.6INFLUENCE6.3Forthright OutgoingSocially confidentEnjoy selling ExpressiveCatalyze othersSet the agendaINFLUENCEINFERENCE5.76.1Forward-thinkingFree from worry OptimisticLively Seek varied activities6.46.8Thick-skinned Express opinionsUtilitarian Take the leadAssertiveSenior Executive Average (1–10 scale)CEO Average (1–10 scale)

7Do CEOs conform to common “CEO stereotypes”?On a statistically significant basis, are CEOs actually COLD?fNOCEOs actually outscore other executives onboth warmth and desire to be around others.AGGRESSIVE?eYESCEOs score higher than other executives onassertiveness and taking the lead.PERSUASIVE?eYESCEOs report enjoying selling to a greater degreethan other executives.OUTGOING?SOMETIMESCEOs show a fascinating mix of bothintroverted and extroverted traits.BRAGGARTS?fNOCEOs exhibit more modesty than theirexecutive peers.FUTURE THINKERS?eYESCEOs outscore their executive peers forinnovation, forward thinking, and even optimism.COMPETITIVE?eYESCEOs outscore other executives for bothcompetitiveness and achievement orientation.RISK TAKERS?eYESCEOs meaningfully outscore other executivesin embracing risk, while still scoring within anoptimal range.

8Best-performing CEOs:purposeful, substantive, down-to-earthWhen we compared the best-performing CEOs to other CEOs, striking results emerged. Underlying the statistically significantdifferentiating traits of the best-performing CEOs (passionate urgency, a lack of pretension, and an ability to rise far above thedetails) are two key concepts: values and efficiency.The values of these executives are manifest in their passion and their humility—they have a strong belief in what they are doingthat lacks narcissistic elements. The efficiency of their approach comes through in their need to constantly make progress, as wellas their ability to jettison minor elements that obfuscate the big-picture strategic view.Statistically significant characteristics of the best-performing CEOSON A MISSIONSTRAIGHT TO THE COREUNPRETENTIOUSPassionateFocus on substanceNot arrogant4.7Sense of urgency4.86.75.56.0Keep problems in perspective5.35.74.84.5Dislike self-promotion5.34.65.2Read situationsefficiently and actively4.7INI T I AT I V EIN5.2F E R E NC EINF LU E N C EINFLUENCEBest-performing CEOs were selected here by applying both a qualitative screen of performance assessment by stakeholdersand a quantitative hurdle of 5% per year revenue CAGR during their tenure, which exceeds average GDP growth.CEO Average (1–10 scale)Best-Performing CEO Average (1–10 scale)

9CEOs of public companies:deliberately understatedStatistically significant characteristics of public company CEOs“Well-deployed reserve”Dislike self-promotion5.04.4Maintain poker face5.74.9Private Company CEO Average (1–10 scale)Public Company CEO Average (1–10 scale)WHAT THIS MEANS Less overtly sales-oriented thanprivate company peers, perhapsdue to greater watchfulness ofstakeholder communications Maintain collected demeanor toavoid spooking the markets“As CEO of the largest US electric utility, I communicatewith a diverse set of stakeholders. It’s important to listenwith an open mind, work to find common ground, andbe clear and focused in expressing my point of view.It’s not about ego. It’s about credibility and trust.”— Lynn Good, chairman, president, and chief executive officer of Duke EnergyDEFINITIONS Public company CEOs are defined here as CEOswho have led a publically traded company. Statistical comparisons were conducted againstprivate company CEOs.PLUSSES AND MINUSES OF THESE ATTRIBUTES S een as deliberateand sincere A ble to buildrelationships withouta potentially offputting sales tone Reserved demeanor canbe seen as withdrawn Enigmatic demeanorcan be seen aswithholding

10CEOs who were internally promoted:quietly digging inStatistically significant characteristics of CEOs who were internal candidatesCome in “with their sleeves rolled up”Focus effort on prioritiesReserved4.85.35.85.2Former External Candidate CEO Average (1–10 scale)Former Internal Candidate CEO Average (1–10 scale)WHAT THIS MEANS Build on ideas of others ratherthan pushing own ideasINI T I AT I V E Can be reserved when firstmeeting others Prepared to leaveunimportant tasks unfinished Do not trumpetpersonal achievementsDEFINITIONS CEOs who had been internalcandidates are defined hereas those who were promotedto the CEO role immediatelyfrom another role withinthe organization. Statistical comparisons wereconducted against CEOs whowere external candidates.Plays a strong role“In my experience, many internal CEOcandidates have an advantage in termsof building on existing relationships toquickly create collaborative teams. It’simportant that these candidates alsohave the ability to take a fresh look at thecompany’s key priorities and challenges.”— Ron Sargent, chairman and chief executive officer of Staples, Inc.PLUSSES AND MINUSES OF THESE ATTRIBUTES L ow-key collaborative approachcan be increasingly relevant totoday’s “open organizations”—and builds well upon preexistingrelationships with seniormanagement team. F ocus on key priorities allowsemphasis on strategicallycritical areas, especially thosewhere continuity is vital. Interpersonal reticence can bewrongly interpreted as a lack ofcaring or even arrogance. Unwillingness to broadcastsuccesses can lead others toperceive a lack of progress.