FIELD NOTES ON CEOS_
We have worked extensively assessing senior executives, and our work always builds on the science. These are our thoughts on some of the organisational science articles that have influenced our thinking. Written by us, not by AI.
When should a board start succession planning?
CEO succession planning is a fundamental board responsibility. Or is it? This article takes a critical approach through the lens of expected shareholder return. This is partly as a counterweight to the often positive view of CEO succession planning and partly to explain why some firms don’t do it. We can summarize it with two scenarios. The first CEO is 50 and isn’t ready to think about the time when he won’t be around. He has a jam-packed growth agenda. The firm has a functional structure, making it hard to create realistic tests for CEO contenders. There are similar competitor companies and talent is fungible. The labor market is fluid and nobody frowns on executives moving. The political and economic climate is unstable, you’re not sure what sort of CEO you might need next.
Succession planning could lead to board-CEO conflict, distraction from priorities, candidates you invest in going to competitors, and possible CEO skill mismatches. You might as well take your chances on the external market when the time comes, especially if there’s a strong infrastructure supporting executive placement. Evidence suggests external CEOs perform as well as internals anyway. The second CEO is 63 and indicated she’s looking to move on. She has successfully delivered her agenda. She is committed to the success of the firm when she’s gone. The company and its environment are stable. The firm dominates its market. You know the skills the next CEO will need. The firm is multinational, you can create CEO-like roles for candidates. There are few companies like this one and the top job is a prized goal. Here the risk seems worth the return for succession planning. The downsides from scenario one probably don’t exist.
The article highlights conditions that might mean these risks are worth taking or not. It isn’t for or against CEO succession planning. I bought this for 30 dollars when asked to read it for a short-notice meeting. Was it worth it? Yes, for the way it clearly frames the issues. I came away thinking it’s not about whether firms should succession plan for CEOs or not, instead it’s about when they should start.
Source: https://lnkd.in/eF4zJcaz
What CEOs do in their time off
We might think our private lives are our business, but that isn’t the case with CEOs. For one thing, we’re fascinated by the lives of these powerful people and their lives are often public. For another, personal experiences (e.g., childhood trauma, being married or not, engaging in infidelity, having children or not, experiencing bereavement) can have effects on firm performance through the influence these life events have on CEOs’ mindsets. Two perspectives, stress theory and developmental psychology, suggest life events can cause disequilibrium in our lives that somehow needs rebalancing - something that’s no different for CEOs.
For the most part, the outcomes observed are the sorts of things you might expect, stabilising personal events for CEOs (e.g. marriage) lead to lower levels of corporate risk taking, and so on. A few things strike me as I read this, the first is that many of the research designs are unlikely to permit more than tentative suggestions of relationships; many of the experiences are out of the CEOs’ control (e.g. anything in childhood, anything bereavement related); and as a result, I’m unsure how actionable the findings are. Perhaps it’s enough that we can coach CEOs undergoing these life events to be aware of the impact it might have on their decision-making.
Source: https://lnkd.in/guGMXmaU
Overconfidence in acquisition waves
Overconfident CEOs are usually too aggressive in acquisitions and wind up overpaying. This research asks whether that’s still the case in acquisition waves, finding that in this setting where speed counts, overconfident CEOs acted earlier and produced stronger returns. Overconfidence was measured by whether CEOs were sitting on in-the-money options without exercising them. You wonder if they were overconfident given they were successful. The answer seems yes, overconfidence was just functional in this context.
Source: https://journals.sagepub.com/doi/abs/10.1177/01492063251397362
Why new CEOs restructure leadership teams
New outsider CEOs reorganize top teams to align vision and strategy and integrate themselves into the firm, e.g. by building legitimacy and trust. A key lever for the new CEO is changing top team interdependence, how much what one person does affects the others. Horizontal interdependence emphasises functional over divisional roles, vertical de-emphasizes hierarchy to support creativity; collective reward coordinates execution. These propositions by Aktan & Weis were supported by analysis of 182 S&P CEO successions. The effects hold for these levers individually not collectively.
Source: https://onlinelibrary.wiley.com/doi/10.1111/1467-8551.70050
Longholder bias
Overconfidence is an excessive belief in one’s capabilities or firm future performance. It’s commonly pinpointed as a reason behind the Lehman Brothers collapse. I regularly assess overconfidence in executive assessment, but it doesn’t neatly fit under our common categories of traits/preferences, drivers/motives, competencies/skills and achievements/experiences. Psychologists think of it as a cognitive bias. We use interviews, questionnaires, and even reference checking that explores decision making styles. These all have the advantage that they assess the concept directly and can be standardized.
Economists have their own measures. These are often behavioural. They are also context dependent and can be harder to standardise. One of the most widely used is longholder bias, proposed by Malmendier & Tate (2005). Longholders are executives who delay exercising their share options, even when it makes economic sense to. They might personally invest in the business beyond minimal required holdings, or prefer debt over equity. These indicators can also be an indication of commitment, but like many things at the extreme become counterproductive.
Source: https://onlinelibrary.wiley.com/doi/full/10.1111/j.1540-6261.2005.00813.x
Narcissism, top teams, and LinkedIn
Narcissistic CEOs are more strategically dynamic. They attempt more acquisitions and their firms’ performance is more extreme. This article shows that when CEOs are narcissistic they bring in top team members who are narcissistic. The top teams also have higher turnover. The intro talks most about the positive benefits, but narcissism comes with ups and downs. In practice I tend to see the interpersonal costs.
This is interesting to me for its assessment approach. It creates an index across the different LinkedIn profile features listed below. I initially thought this work was most useful for researchers, but it’s useful to CEOs and others considering what they’re signalling / attracting with their LinkedIn activity. LinkedIn Narcissism indicators
how many pictures do they share of themselves,
how long the ‘about’ section of their profile is,
the number of professional experiences they list,
the number of skills they list,
the number of credentials they list.
Source: https://lnkd.in/e-rJvi6t
CEOs, personality, and organisational culture
Here O’Reilly et al. propose that the effect of CEO personality on performance outcomes is carried by organisational culture. They explore links between CEO personality, estimated from language modeling of earnings calls, and organizational culture, which they estimated from Glassdoor reviews. The finding that jumps out is the negative correlations between CEO conscientiousness and adaptive cultural dimensions like agility, innovation, execution, and performance. They say this is because the CEOs become myopic and too detail focused.
The downside of the bright sides of personality, like the risks of high CEO conscientiousness, have been talked about before. In practice, at the individual level, these effects don’t tend to appear more than would be expected by chance, especially when you control for other traits like neuroticism. All in all, I encourage high conscientiousness in our CEOs.
Source: https://lnkd.in/ejazYcRh
What venture capitalists actually screen for
In venture capital decision making, deal selection (choosing the right deal from a pipeline of opportunities), is the factor considered most important by funders, followed by post investment value add and deal flow (opportunities pipeline). The most important factor when selecting the deal is overwhelmingly team quality: ability, passion, experience and teamwork. It is credited in nearly all successes and blamed in nearly all the failures. It’s the jockey that matters for VC success, not the horse.
Source: https://www.sciencedirect.com/science/article/abs/pii/S0304405X19301680
Managing AI agents as a management skill
Quaquebeke et al. say regular employees will need to be multilevel managers of AI agents, setting their strategic goals (top level), designing workflows (mid-level), and quality control (hands-on operational). Costs might include ethical isolation and loss of meaning. Heavy AI users I talk to are working this way already. Those I talk to don’t report these downsides. But their early adoption reflects their technical over social interests. As more people begin to work this way I expect reports of these challenges will rise.
Source: https://www.sciencedirect.com/science/article/abs/pii/S1048984326000342
How to acquire the extraverted-leader advantage
In leadership development programmes we run, a topic that comes up often is how to be seen by others as leader-like. This is an important question, to be an effective leader you need to be recognised by the group. Research is clear about one thing, extraverts emerge as leaders more easily than introverts. But why is that? It turns out that what others recognise in extraverts is actually extraverted states.
This new article from Spark and O’Connor describes how introverts can also experience and show their extraverted states and often enjoy doing it. If you’re an introvert needing to appear more leader-like, you can do it and it’s pretty straightforward. Show enthusiasm, speak up, be bold and sociable. The research says you might enjoy it, and others will recognise you in the same way they recognise extraverts.
Source: https://lnkd.in/djax5Cbs
Four talent philosophies
In strategic talent workshops we highlight that if you’re responsible for talent acquisition or learning, it’s important to be clear about your talent philosophy. A talent philosophy describes your fundamental beliefs about talent, which in turn guides your approach to hiring and developing talent. Meyers et al. (2020) suggest there are two dimensions along which talent philosophies vary, the first is whether you believe talent is rare (or common) and the second is whether you believe talent is developable (or innate). This leads to four philosophies about employees, each leading to different courses of action in talent management.
Managers who believe talent is rare and stable emphasise the war for talent, they identify and retain talented individuals.
Managers who believe talent is rare and developable emphasise only developing individuals with the greatest potential.
Managers who believe talent is common and stable emphasise finding the right role for each person’s talent.
Managers who believe talent is common and developable offer training very widely.
In practice managers may demonstrate each philosophy to different degrees. Different talent philosophies are also more common in different types of organizations, e.g., privately held, larger organizations tend to have managers who believe talent is rare and stable, leading to a war for talent perspective. By making your talent philosophy explicit you can allow others to challenge your approach and ask what your philosophy means for your strategy and important outcomes like diversity.
Source: https://lnkd.in/d_6hj8TB
Three leadership strategies for M&A integration
Psychologists advising on mergers and acquisitions need to understand the workforce implications of different integration strategies to know when and why we assess leaders in addition to how we do it. Haspeslagh and Jemison (1991) proposed three strategies: Preservation for when high autonomy and low interdependence are needed; Absorption for when high interdependence and low autonomy are needed; and Symbiosis for when high autonomy and high interdependence are needed. Preservation implies retaining existing management. Absorption suggests replacement or restructuring. Symbiosis suggests retaining management short term to protect culture while managing collaboration.
Source: Schijven, Heimeriks, Graebner, Haspeslagh & Mitchell (2024). Strategic Management Review.
Is leadership different at the top?
Interesting findings across articles suggesting leadership requirements may be different between the top of organisations and leadership at lower levels. Relevant to consider for those of us advising top teams. For lower level roles in organisations internal hires often turn out to be better performers (a) but there is evidence that externally hired CEOs perform no worse than internally hired CEOs (b). Personalising support for followers is usually considered positive (c) but some research shows too much personalisation from a CEO to her/his top team reduces an executive committee’s effectiveness (d).
Sources: (a) Bidwell (2011); (b) Quigley et al. (2019); (c) Wang et al. (2011); (d) Zhang et al. (2015).
Defining confidence in executives
Definitions of confidence are hard to pin down, but you might think you know it when you see it. You hear words like gravitas and presence to describe it. While that’s okay for informal conversation, for hiring and coaching we need to be precise. Heavey and colleagues (2022) define it as an executive’s generalized or domain-specific conviction in their capability to complete tasks, influence events, and/or achieve outcomes. It includes parts of hubris, narcissism, core self-evaluations, optimism, and humility.
Existing research focuses on overconfidence and mostly ignores other levels. It looks at whether executives think they can achieve goals, rather than beliefs about the superiority of their skill or beliefs about the likelihood of events. It treats confidence as a single idea when it has many parts. It doesn’t adequately distinguish confidence from related concepts. The authors explore these issues and examine the ways confidence affects executive behaviour.
Source: https://lnkd.in/gVS2xEZp
The CEO succession problem
We need different types of leaders now than we did pre-Covid and before the ongoing wars. Many CEOs don’t have the motivation and capabilities to operate successfully in this new environment. They’re either leaving voluntarily or being told their time is up by their boards. The estimated cost of poor CEO transitions in S&P 1500 firms? One trillion USD annually. Firms need to get CEO succession right.
Source: https://lnkd.in/e6aSdTaZ
Skip-level leadership
Skip-leaders are higher managers who manage workers two levels below. If Susan reports to John, who reports to Lisa, Lisa is Susan’s skip-level leader. Schilpzand et al. (2026) discuss three ways skip leaders and lower workers interact beyond the cascading via the leader in the middle. The skip leader directly interacts with the worker. Skip leader affects the lower-level leader-worker relationship. Employee goes to the skip leader with ideas or problems. Going through your manager doesn’t always get results, but going around them has its own risks. Lots depends on your cultural norms. Not easy!
Source: https://www.sciencedirect.com/science/article/abs/pii/S1048984325000694
Traits that set executives apart
Here’s a useful review showing that executive personalities shape a wide range of organisational processes and practices, from strategic leadership and corporate governance to human resources policies, and ultimately, firm performance. A wide range of personality factors are reviewed here, from the most studied traits of executives (i.e., positive self-regard: core self-evaluations, narcissism, hubris and overconfidence), to the broad frameworks many are familiar with like the Big Five and the Dark Triad. Assess personality when you’re hiring people for positions of power.
Source: https://lnkd.in/dZB7U5DK
CEO personality and firm outcomes
Upper echelons theory says CEO personality shapes firm outcomes by framing risks and opportunities and influencing interactions with colleagues. We can think of the effects via an input (personality), throughput (things CEOs control like M&A, TMT pay), and output (firm performance) framework. Research is mostly Western and overemphasises dark traits like narcissism but other cultures and trait clusters need attention, e.g., pro-social traits. We should tailor governance to CEO profiles, train directors to recognise personality behaviour, and treat assessment as due diligence.
Source: Borgholthaus, Harms, White, Villalpando & Bourgoin (2026).
Dual CEO structures
Dual CEO structures have advantages and disadvantages that don’t rule it in or out but make it more feasible under specific conditions. Famous examples include Greg Peters and Ted Sarandos at Netflix and Marc Benioff and Bret Taylor at Salesforce where the set-up ended early. This research found it tends to occur as part of merger transitions or when there are cofounders.
Firms adopting the structure tend to have lower debt and a less independent board structure with co-CEOs doing some of the traditional board monitoring. Co-CEOs individually earn less incentive pay than solitary CEOs. The market often views the structure favourably although it works better if there are clearly separated responsibilities and complementary skills e.g. strategy versus operations. It doesn’t work as well when responsibility is ambiguous or the arrangement is politically forced.
Source: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6288.2011.00305.x
The market for private-equity CEOs
CEOs of public companies tend to be internal hires, while CEOs of private equity backed firms tend to be external hires. In private equity, firm specific CEO human capital (i.e., CEO skills relevant to the current employer only) does not appear relevant, while industry skills are highly relevant.
PE-backed CEOs are paid significantly more than CEOs of similarly sized public companies, and only slightly lower than S&P 500 CEOs despite running smaller firms. Credible options outside of public companies for CEOs may be what keeps remuneration high, even when they don’t have skills that are relevant to their current firm only. Given the overlapping hiring pool, it isn’t clear why hiring patterns differ for CEOs in public and PE owned companies.
Source: Gompers, Kaplan & Mukharlyamov (2023). NBER Working Paper No. 30899.