It is true. Your CEO’s personality influences his/her ability to scale (among other things). It may seem self-evident. One’s intuition may suggest such a relationship between personality traits and workplace effectiveness. Well, it is more than a hunch. Published research demonstrates a relationship between CEO personality traits and company performance.
Gow, Kaplan, Larcker and Zakolyukina used the Big 5 personality framework to conduct their research. The Big 5 personality framework consists of the following 5 personality traits:
- Openness: CEOs who score high in this area are intellectually curious, value uncommon thought processes, are creative thinkers, are less prone to selective perception bias, exhibit strategic flexibility and encourage experimentation and risk-taking.
- Conscientiousness: CEOs who score highly in this segment are achievement-oriented, results and performance-driven. They also run the risk of selective perception bias and of having a narrow field of vision.
- Extraversion: CEOs that score highly in this category are energetic, enthusiastic and forcefully communicate their ideas. They are more likely to initiate a change of strategic direction and are less likely to seek input and ideas from direct reports.
- Agreeableness: CEOs in this category are typically trusting, avoid conflict, may avoid making difficult decisions, prefer flat organizational structures and seek to build consensus.
- Neuroticism: CEOs overweight this category are more prone to psychological stress and are prone to anxiety and hostility. They may have a negative bias when digesting new information.
We have contemplated embedding CEO Personality Analytics into our CEORater platform for over a year. My view is that this capability could have broad application for institutional investors, Board members, executive recruiters and C-Level executives.
We are testing data as we speak. Personality trait assignment is executed using information readily available in the public domain (transcripts, public blog posts, etc.). I plan to share the output from our research in the coming weeks and months.