Opinions about branding by Dr. Dannielle Blumenthal

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Thursday, October 22, 2015

Do Most Top Executives Have Good People Skills?

Because metrics of CEO performance have little or nothing to do with genuinely treating people well, most organizations inadvertently encourage their leaders to step on the very people they are supposed to lead.

Think about it. When the term "CEO" (or any term associated with a top executive) is uttered, most of us think of "hard" skills. (See for example this article in Forbes: "Great CEOs Must be Either Technical or Financial.")

However at least one analysis of CEO data shows that those who occupy this role definitely have certain seeming "people skills" that non-CEOs lack.

Or are they?

The screenshot below is from "Making It to the Top: Nine Attributes That Differentiate CEOs," an analysis of an in-house database of "nearly 4,000 executive assessments, including over 130 CEOs" done by consulting firm Russell Reynolds Associates.



The company found that CEOs have 9 differentiator qualities. The following 4 are specifically associated with people, under the category "Team Building" -
  • "Seeks to understand different perspectives but does not overanalyze" 
  • "Displays intensity/emotion but maintains control" 
  • "Involves others in decisions but also is an independent decision maker" 
  • "Is comfortable with a variety of people but is not too trusting." 
While on the surface the CEO seems to be a good team member, is it more plausible that this person is actually an advanced manipulator of people?

Consider a recent study, "Narcissistic CEOs and executive compensation" (The Leadership Quarterly, 2013). It found that CEOs may actually be more likely than non-CEOs to have this personality disorder.
"Narcissism is characterized by traits such as dominance, self-confidence, a sense of entitlement, grandiosity, and low empathy.There is growing evidence that individuals with these characteristics often emerge as leaders, and that narcissistic CEOs may make more impulsive and risky decisions."
Certainly CEOs are not punished for having poor people skills or even evaluated based on the quality of their interactions with other people.

This is true even though we hear over and over again that "people are an organization's most important asset." See for example:
Harvard Business Review, in "Valuing Your Most Valuable Assets," points out this discrepancy, noting that employees don't normally get white-glove treatment. Yet HBR itself discounts the quality of employee management completely in its ranking of "The Best-Performing CEOs in the World."

Harvard's CEO rankings are not based on "people skills" at all!

See below the basis of the rankings and the weights associated with them:
  • Stock performance (80%): 1) total shareholder return 2) change in market capitalization (which is the cost of a share times the number of shares outstanding) 
  • Responsibility performance ("ESG") (20%): A combined measure of the company's performance on 1) environmental impact 2) social responsibility and 3) quality of governance (Research Methodology
Here's the bottom line: When we put our metrics where our mouths are, we will stop seeing mini-dictatorships crop up in in professional organizations. This will be an automatic byproduct of a different kind of "normal" business climate, one in which we stop tolerating leaders with personality disorders and only hire people who routinely treat others with human decency.

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This question was originally posed on Quora. This blog is a repost of my answer there. All opinions my own.