MW Researchers rated every S&P 500 company CEO since 2000. Here's what they found.

By Claudius A. Hildebrand and Robert J. Stark

CEOs might not be so idolized if we realized that many wash out of the job quickly

Most CEOs benefit from a powerful 'honeymoon' tailwind of optimism that lifts their company's share price, followed by a period where gains slow or reverse.

We either lionize chief executives - elevating them as omnipotent idols singlehandedly propelling their organizations to success, or we vilify them as greedy schemers, willing to sacrifice workers' livelihoods or the health of the planet to secure their exorbitant pay.

Mythologizing the CEO is nothing new, but the consequences of turning these leaders into either icons or scapegoats is profound. The mythmaking has popularized badly misguided notions about how CEOs succeed in a job that's so cognitively, emotionally and physically challenging that almost one-third of those appointed don't last even three years in the role.

These caricatures obscure the many important lessons about how CEOs struggle with - and overcome - the evolving challenges they face throughout their tenures.

To clear the fog, we took a systematic approach to understanding superior CEO performance. In an unprecedented effort, we studied the performance of every CEO who has led a S&P 500 SPX company since 2000. We interviewed more than 100 CEOs about their success formula, complementing what we learned through our own observations advising and coaching CEOs.

The result? Rather than big bold decisions and grand oration mobilizing others, it's tenacity and the steady grind that wins the day.

Myth vs. reality

All the mythologizing creates a dangerous disconnect between expectations and reality. This disconnect can lead company boards to become too deferential to CEOs when the business appears to be doing well - overlooking potential signs of complacency creeping in - or to overreact when challenges arise.

Take, for instance, the countless stories from leaders about the highs and lows of their first couple years. Most CEOs benefit from a powerful "honeymoon" tailwind of optimism that lifts their company's share price, followed by a period where gains slow or reverse. For example, Randy Hogan recalled the ups and downs of his early years as CEO of Pentair $(PNR)$, when a stellar first year was followed by turbulence in the second, with the share price taking a bad tumble. "The stock overshot [in the first year], but you can't have the CEO go out and say, 'The stock's too high,'" he said. "First I was a hero, then I was a bum."

CEOs also fall victim to the mythmaking - especially the characterization of the "hero" CEO who alone has all the answers. The belief that they have to know it all and solve it all can keep CEOs from being vulnerable about their anxiety and self-doubt during challenging periods, discouraging the kind of self-reflection that is crucial for ongoing development and growth.

How top CEOs navigate the complexities of leadership

High-performing leaders meet the challenges of each stage, growing in the role over time.

Our research underscored that CEOs who succeed are nothing like the mythical figures who inherently "have what it takes." Instead, we found that high-performing leaders meet the challenges of each stage, growing in the role over time, compensating for weaknesses in their skills and experience, and rekindling their energy and passion as years proceed.

Here are some strategies for CEOs to cultivate a more effective - and reality-based - perspective to fuel performance throughout their tenure.

-- Retain a beginner's mindset: Even the highest-performing CEOs, who achieved successful, long-term tenures, didn't start the job as the fully formed forces of nature as portrayed in the prevailing mythology. Many had serious deficits they had to work hard to correct once in the role and then continued to push themselves to grow and develop. High-performing CEOs cultivate a "beginner's mindset" in themselves and others by visibly self-critiquing, seeking feedback, incorporating others' views and adapting their approach when necessary.

-- Create opportunities for open communication and dialogue: Developing strong relationships and effective channels of communication with direct reports and board members is essential for piercing the mythology that the CEO has all the answers and for cultivating the board and leadership as partners in performance. With investors, CEOs can tamp down hype and earn trust by practicing the art of "sober selling," balancing optimism about opportunities with acknowledgements of what could go wrong.

-- Practice leadership as a team sport: CEOs can shift the focus from the "hero CEO" to the power of the team by the highlighting collective efforts behind successful initiatives and fostering a sense of shared purpose and collaboration.

-- Cultivate a support network: The mythology of the all-knowing CEO also serves to isolate. Building a good network of peers is a great means of combatting the loneliness of the job and reminding CEOs that others are likely struggling with similar challenges. "I now have a better appreciation of why CEOs tend to hang with other CEOs," UPS UPS CEO Carol Tomé said.

-- Seek diverse perspectives: CEOs also can break through the isolation bubble by actively seeking internal and external perspectives beyond the board and C-suite. For example, getting out in the field and developing good channels of communication deeper down into the organization allow CEOs to see and hear for themselves how moves are unfolding.

Reframing leadership

Myths extolling CEOs as corporate saviors or condemning them as treacherous villains cloud our understanding of why some CEOs drive phenomenal innovation and growth and others quickly falter. By rejecting the mythologizing, company boards, other stakeholders and CEOs themselves can learn from the examples of the highest-performing leaders, who develop the mental fortitude, emotional resilience and self-awareness required to learn and grow, seize new opportunities, and overcome emerging challenges.

Claudius A. Hildebrand and Robert J. Stark are the authors of "The Life Cycle of a CEO: The Myths and Truths of How Leaders Succeed," (PublicAffairs, 2024). Hildebrand leads CEO Analytics at leadership advisory firm Spencer Stuart. Stark co-leads Spencer Stuart's CEO Succession practice.

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-Claudius A. Hildebrand -Robert J. Stark

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January 09, 2025 07:41 ET (12:41 GMT)

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