Have CEOs Changed? A Paradigm Shift in Executive Leadership

In an era of transformative economic upheaval and societal change, whether chief executive officers (CEOs) have adapted to meet the evolving demands of their roles has captured the attention of scholars and practitioners alike. The seminal work by Decressin, Kaplan, and Sorensen (2024), titled "Have CEOs Changed?" and published as an NBER working paper, delves into this intriguing question with a level of rigor and sophistication that is certain to pique the interest of even the most discerning reader.

Building upon the groundbreaking research of Kaplan and Sorensen (2021), who elegantly distilled the multifaceted nature of CEO characteristics into four fundamental factors—general ability, execution vs. interpersonal skills, charisma vs. analytical skills, and creativity vs. detail orientation—the authors embark on a meticulous examination of the shifts in these attributes over two decades. The study's foundation rests upon an extensive dataset of 4,900 executive assessments, meticulously curated by ghSMART, a consulting firm renowned for its expertise in evaluating top executives during critical junctures of corporate decision-making.

The authors' application of factor analysis, a technique that has become a hallmark of sophisticated quantitative research, allows them to uncover the latent dimensions that encapsulate the essence of executive attributes. This approach not only lends a statistical elegance to the study but also provides a framework for understanding the complex interplay between CEO characteristics and the evolving corporate landscape.

The authors delve into the temporal trends in CEO attributes, particularly in the aftermath of the Global Financial Crisis (GFC). The findings challenge conventional wisdom and invite the reader to reconsider long-held assumptions about the nature of effective leadership. The revelation that CEOs assessed post-GFC exhibit lower general ability and a more execution-oriented, less charismatic, and more detail-oriented profile is a testament to the study's ability to uncover counterintuitive insights that defy simplistic explanations.

The absence of an observable increase in the importance of interpersonal or social skills among CEOs, despite the prevailing narrative in the broader economic literature, is a finding that is sure to spark debate and inspire further research. The authors' meticulous analysis of the correlation between CEO abilities and those of other C-level executives within the same company adds a layer of nuance to the discussion, suggesting that the complementarity of high-ability executives may be a critical factor in determining corporate success.

As the study delves into the potential mismatch between the supply of executive talent and corporations' evolving needs, the reader is confronted with a paradox that demands further exploration. The declining trend in general ability and creative-strategic skills among CEO candidates, juxtaposed against the increasing corporate demand for strategic leadership, raises profound questions about corporate governance's future and long-term corporate performance's sustainability.

In conclusion, "Have CEOs Changed?" is a tour de force of economic research that challenges preconceptions and ignites a passion for further inquiry. The authors' meticulous analysis, elegant methodology, and thought-provoking conclusions make this study a must-read for anyone seeking to understand the complex interplay between executive leadership and the ever-changing corporate landscape. As the authors themselves acknowledge, the findings raise as many questions as they answer, inviting the reader to embark on a journey of discovery that promises to reshape our understanding of what it means to be an effective CEO in the 21st century.

Reference

Decressin, Y., Kaplan, S. N., & Sorensen, M. (2024). Have CEOs Changed? NBER Working Paper No. 32854. Retrieved from: https://www.nber.org/papers/w32854.