Leadership Development: What It Takes to Become a Top-Performing CEO
The role of a CEO is arguably the most important in any organization. In fact, research from McKinsey indicates that as much as 45% of a company’s performance may be due to its CEO’s influence.
The role of these leaders may be particularly important—and also particularly demanding—in today’s unpredictable and fast-evolving economic climate. In addition to the day-to-day business of running an organization, CEOs need to grapple with immediate challenges, such as inflation and supply chain disruptions, alongside game-changing longer-term shifts, such as the increasing power of artificial intelligence, aging populations and the growing impact of climate change.
Against this backdrop, it is vital that boards, leaders and would-be leaders understand what it takes to become a top-performing CEO. There are a number of core behaviors that all CEOs need to master. Provisional results from our CEO Excellence Assessment Tool (CEAT), a simple self-assessment survey, indicates that some of these behaviors may come more naturally to CEOs than other behaviors. Results also indicate that self-assessed performance may differ by gender, with female CEOs ranking themselves higher than their male peers across several behaviors. The good news for CEOs, however, is that recent research also indicates that high-quality training can be very effective in boosting performance across key leadership behaviors.
CEOs Need to Master a Core Set of Leadership Behaviors
The idea that certain characteristics are common across successful leaders has a distinguished pedigree. As early as the first century AD, for example, the Roman Emperor Marcus Aurelius argued that a good leader should be “simple, good, pure, saintly, plain, a friend of justice, god-fearing, gracious, affectionate, and strong for [their] proper work.” More recently, many books and articles have been published laying out, for example, the eight essential qualities of successful leaders.
In our experience—and as laid out in the book CEO Excellence, written by Carolyn Dewar, Scott Keller and Vikram Malhotra—leadership excellence has six key dimensions: setting the direction, engaging with the board, aligning the organization, mobilizing through leaders, connecting with stakeholders and managing personal effectiveness. These dimensions can be further broken down into 18 behaviors (Exhibit 1).
While each CEO has a unique set of strengths, our survey results indicate that some of these key leadership behaviors tend to come more naturally to CEOs. CEOs tend to be relatively confident, for example, in their ability to manage their personal effectiveness and set or reframe the vision for the company.
They tend to be least confident in their ability to tap into the wisdom of their board members, with the CEOs we surveyed giving themselves an average score of 3.2 out of 5 for this behavior. CEOs also rank themselves comparatively harshly on their ability to allocate resources objectively (3.3 out of 5), and to prioritize and develop engagement strategies for each of their priority stakeholders (3.4 out of 5). Challenges managing board members may be particularly problematic for the smooth running of a company given recent evolutions in the role of the board, which, over recent decades, has tended to be more proactive in providing direction and oversight on key strategic and operational issues.
Another important finding is that women CEOs rank themselves higher than their male peers on most behaviors. This may come across to some as surprising—given the long-existing stereotype that women have less self-confidence—but our provisional survey results indicate that female CEOs are more confident than their male peers in their performance related to connecting with the board and stakeholders, as well as across many key practices.[1] Male CEOs, on the other hand, tend to rank themselves higher on vision, strategy and mobilizing the team. Such differences warrant further research.
Great Leaders Can Be Made, as Well as Born
True leadership requires not only a core set of fixed skills but also the ability to constantly adapt to the evolving context of both the company and the economy more broadly. These changing requirements are part of what makes the CEO job so interesting, though they may also make the role daunting—particularly for new CEOs who are still looking to gain mastery of leadership skills. Unsurprisingly, CEOs’ confidence in their own performance builds over time. Our survey results indicate that longer-tenured CEOs rank themselves more highly on most behaviors, including those related to engaging the board and connecting with stakeholders.
The good news for CEOs—and for the organizations they lead—is that there is a growing body of evidence suggesting that high-quality training can improve leadership performance. For example, using experiments and data analysis, leadership researchers Dana Born, Horace Ling and Ayse Yemiscigil determined that well-implemented leadership development programs can substantially boost personal growth and well-being. Our provisional survey results support this finding: CEOs who completed a nine-month training program became, on average, more confident across all 18 key leadership behaviors (Exhibit 2).[2]
The potential efficacy of training in improving leadership performance should be encouraging because it implies that CEOs can take proactive steps to build their skill set. While the demands of the role can make it difficult to find time to invest in personal development, those who do not do so may be losing a major opportunity to boost their own performance and therefore that of their organization. CEOs need to be aware of the mindsets and skills that matter and also embrace the joy and importance of constant learning—in both formal and informal settings. Those who succeed will be well positioned to build and lead thriving organizations in today’s complex and evolving world.
Gautam Kumra is Chairman of McKinsey Asia, and Joydeep Sengupta is a senior partner and leader of the McKinsey Center for CEO Excellence based in Singapore.
