Companies headed by introverts performed better in a study of thousands of CEOs. (2016)

“…if we knew how the personality traits of CEOs produced different business results, could boards hire accordingly?”

Oliver Staley
Quartz 5 Aug 2016
Image: Reuters

Article based on a working paper by Ian D. Gow, Harvard Business School; Steven N. Kaplan and Anastasia A. Zakolyukina, University of Chicago; David F. Larcker, Stanford University; paper released by the National Bureau of Economic Research

“When a company hires a charismatic CEO like Carly Fiorina at Hewlett Packard, it tends to be disappointed,” says Steven Kaplan, co-author of a new study exploring the relationship between CEO personality traits and business results.

Other examples of extroverts hired with fanfare and whose corporate results didn’t live up to expectations include Rob Johnson at J.C. Penney and Bob Nardelli at Home Depot.

“The type of CEO who lands on the cover of business magazines has a big, outgoing personality, all the better to charm investors, win over partners and rally employees.

“But what if companies run by extroverts did poorly? What if companies fared better in the hands of introverts?

“What if we knew how the personality traits of CEOs produced different business results, and if boards could hire accordingly?

“The authors used linguistic analysis of conference calls to sort 4,591 CEOs of publicly traded US companies into five broad personality traits…..

“They found that companies with CEOs who have high scores for openness spend 10% more on research and development, compared to the mean score of all the CEOs examined in the study.

“CEOs who scored highly in extroversion run companies with a 2% less return on assets. The converse is also true: Introverted CEOs ran companies that outperformed their peers as a whole.”

Access the full article here: Companies headed by introverts performed better in a study of thousands of CEOs