what makes a ceo exceptional - mckinsey
This McKinsey article (April 2017) studies roughly 600 S&P 500 CEOs from 2004–2014 to identify characteristics of the top-performing leaders. It defines “exceptional” CEOs as the top 5% whose companies delivered >500% total returns to shareholders (TRS) over the CEO’s tenure (normalized by industry). Key findings: exceptional CEOs are about twice as likely to be external hires; they are significantly more likely to conduct a strategic review early (Exhibit 2: +58) and to launch cost-reduction programs (+19); and they are less likely to pursue organizational redesign or management reshuffles in the first two years. The article distills three lessons for transitioning CEOs: adopt an outsider’s view, invest in a robust strategic review, and calibrate organizational change to context.
Questions this document answers
Roughly 600 S&P 500 CEOs between 2004 and 2014.
The top 5% of CEOs in the sample whose companies' total returns to shareholders increased by more than 500% over their tenure, normalized for industry performance.
The top quintile (120 CEOs) achieved at least 9% TRS above industry cohorts each year of their tenure.
They were more likely to conduct a strategic review (+58) and to launch cost-reduction programs (+19); they were less likely to do management reshuffles (−23), business/product launches (−40), or organizational redesign (−48).