The Qualities of the Perfect CEO

Mark Klebanov, Morten Sorensen, and Steven Kaplan authored, “Which CEO Characteristics and Abilities Matter?” The paper provides new evidence on CEO characteristics and abilities. All aspects from hiring, investment decisions, and firm performance, are highlighted, according to the Harvard Law School Corporate Governance Blog.

The study offers detailed assessments of 316 CEO candidates for positions in firms funded by private equity (PE) investors. Buyout (LBO) and venture capital (VC) investors are also included. Thirty characteristics were studied, with efficiency, teamwork, and analytical abilities heading the list.

The findings are organized into two dimensions:

1. General talent
2. Team player and interpersonal talents versus fast, aggressive, and persistent behavior

An ideal CEO possesses strong execution skills. In fact, rather than team-related skills, being able to successfully execute decisions is particularly useful for LBOs. Being more execution-focused does not hurt team-related attributes and execution skills are shown to lead to higher rates of success.

An overly aggressive CEO is not the solution, but rather, the study shows that selecting a CEO based on exceptional team-related qualities is overrated. When hiring a CEO, a team-player is desirable, but also an individual who does not let a team-player mentality override important and assertive decision-making.