Measuring exceptional performance by CEOs can be done in a number of ways. Maybe the CEO was able to achieve a turnaround in a tough economic climate. Or, maybe she was able to improve the company’s reputation after a scandal destroyed its reputation. McKinsey likes to measure performance in terms of stock price and returns to shareholders. In a newly released study, McKinsey analysts say the best CEOs share a few characteristics.
If you’re sitting in the corner office, you’ve likely got a plan for where to take your organization. Before you get the ball rolling, you might want to consider how others in similar situations have maximized the organization’s value. Here’s what the McKinsey folks say about the best CEOs.
First, if you’ve been hired in from the outside, count yourself lucky. CEOs who are the new kids on the block are far more likely to achieve great positive change in the organization. The success may stem from a lack of baggage that insiders have. Insiders may feel they need to play politics to maintain long standing relationships in the company. To truly affect change, CEOs often have to shift culture. Insider CEOs can develop a new organizational culture, but they’ll have to step back and maintain objectivity to be successful.
Along with an objective viewpoint about organizational culture, exceptional CEOs are also more likely than their lower performing counterparts to conduct a strategic review within the first two years of their start date. Such reviews typically involve a top-to-bottom consideration of which product or service lines are maximizing a company’s profits. Offerings which don’t have a growth outlook are cut, freeing up resources to be used on more promising initiatives.
Huge shifts in strategy and culture usually don’t make the CEO the most popular person in the company at first. But, the individuals who are able to lead through times of stressful change reward the shareholders, and they will win the allegiance of individuals who are willing to support new ideas.