Cheetah CEOs vs. Lamb CEOs

Posted on by in Business, Finances/Money Management, Growth, Leadership

In recent years, there’s been a fair amount of debate over Emotional Intelligence and its necessity in the C Suite. However, a recent study of 225 CEOs by the University of Chicago (and found at the Topgrading Blog) revealed that “those who were extremely results-oriented delivered much better financial results than CEOs high in emotional intelligence.”

The author continues,

“Among the high-scoring traits of CEOs delivering superior financial results are: following through on commitments, hiring A players, setting high standards, holding people accountable, and analytical skills. Correlating less with financial performance are treating people with respect, listening skills, persuasion, creativity, and enthusiasm.”

Now, I don’t this invalidates the necessity of high EI. Rather it puts it in context. If given the choice between hiring a high results-oriented leader or a high EI leader, you would normally want to choose the high results-oriented leader–unless that leader’s EI is low (the Topgrading recommendation is that an EQ of 7 or higher is good, while a 6 or lower is bad).

Geoff Smart (of Topgrading) says that while soft skills are important, the existence of hard skills is what differentiates CEO performance. And the ultimate proof is that “cheetah” CEOs meet or exceed their financial targets TWICE as often as the “lamb” CEOs.

If you haven’t read the article yet, why don’t you do so now. It’s worth the read.

In addition, I think you’ll also like the discussion on the cost of CEO turnover and some interesting guidelines (from an article in Chief Executive magazine). For example,

  • Cost of a sales rep mis-hire = 5x salary.
  • Cost of a senior manager mis-hire = 27x base comp.
  • Avg. cost of a CEO of a large company is $53M
  • Avg. cost of a CEO of a mid-range company is $22M
  • Avg. cost of a CEO of a small company is $13M
  • A CEO change usually means a 25% departure of other execs
  • Average severance for large company CEO is 3 times salary
  • Average severance for a mid-size company CEO is 2 times salary
  • 40% of CEOs are gone within 18 months

Plus more. So head over to topgrading and read the whole article. It’s worth the time!

P.S. This may also explain why so many non-profits and religious organizations, like churches, have a hard time growing. Just a thought!

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2 Responses to “Cheetah CEOs vs. Lamb CEOs”

  1. Jeannette 28 January 2009 at 9:50 am #

    I don’t see this as too surprising. It basically affirms that the best CEO’s are focused leaders who are clear about goals and keep the organization focused on achieving those goals. It still affirms the need for high EI combined with these skills.
    While hiring A players, setting high standards, and holding people accountable coorelate with high financial performance, successful execution of those tasks requires well developed soft skills. So, it seems to me that the bottom line is the most successful leaders have the unique ability to balance results with people. Both are required in high measure, not one or the other.

  2. Bruce Johnson 28 January 2009 at 10:59 am #

    I agree on one level (I’m usually a both/and vs. either/or guy). But the point is that there has been a swing over the past several years to more EI over results. The blog author’s specific comment was about Jeff Immelt vs. Jack Welch and Mark Hurd over Carly Fiorina. Having been a pastor of a large church before my current career, I’m obviously not against likeability or soft skills, but there has been a culture change that favors softer skills over delivering results and accountability. And in the non-profit world, this is a rampant problem.
    So, while philosophically what you’ve said ought to be obvious, I’d argue that it’s not in practice. Also, note that the author said that a EI of less than a 7 is a disqualifier for a results oriented leader. Again, not either/or but if you have a 9 results and a 7 EI candidate vs. a 9 EI and a 7 results, the study says that the 9 results-oriented leader will double the financial return of the higher EI leader.

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