Introvert vs Extrovert CEOs

 

Vocabulary

charm	win over	land on the cover
woo	outgoing	thing in common
inspire	rally (2)	all the better
CEO	board (2)	conscientious
trait	assume	accordingly
hire	based on	publicly traded company
sort	neurotic	make sure
gather	analysis	conversely
blame	contribute	conference
session	conduct	transcript
asset	indicate	return on assets
run (2)	real world	outperform
peer	potential	reputation
link (2)	hesitate	deliver (2)
seek	apply (2)	correlation
factor	consider	expressive
trend	linguistic	in other words
distinct	forecast	survey (2)
co-	guarantee	automatically
fanfare	point out	charismatic
predict	causation	achievement
assume	live up to	embrace (2)

 
 
 
 

A Widespread Image

CEOs who land on the cover of business magazines all have one thing in common: big, outgoing personalities — all the better to charm investors, win over partners, woo clients, and inspire and motivate employees.

Or so it seems.

But is this the case in the real world? Do the personality traits of CEOs produce different business results? And if so, should and could corporate boards hire them accordingly?

The Study

A study by the University of Chicago and Stanford sorted 4,591 CEOs of publicly traded US companies into five distinct personality traits. Known by psychologists as the Big Five, these are agreeableness, conscientiousness, extroversion, neuroticism, and openness to experience.

Linguistic Analysis

The researchers first conducted a linguistic analysis of the conference calls of 119 CEOs. They then gathered data on their personalities based on interviews and surveys of employees.

Thus a relationship between how those CEOs spoke and their personality traits was established.

For example, CEOs characterized as neurotic tend to use the first person singular, lots of adverbs and many words per sentence, while those favoring words with more than six letters, hesitating and using qualifiers score highly for conscientiousness.

The authors then took those linguistic groupings and formula, and applied them to the transcripts of the Q&A sessions on 70,329 corporate earnings conference calls conducted by thousands of company chiefs.

The Results

The result indicated that CEOs who scored highly in extroversion ran companies with a 2% less return on assets. Conversely, introverted CEOs led firms that outperformed their peers as a whole.

Chicago professor and co-author Steven Kaplan pointed to examples like Carly Fiorina at Hewlett Packard, Rob Johnson at J.C. Penney and Bob Nardelli at Home Depot as extroverts hired with much fanfare . . . but whose corporate results didn’t live up to expectations.

One possible explanation for the link between extroversion and poorer returns is that an already failing company may, in desperation, seek out a big personality to rescue it, but by then nothing can be done, said Kaplan.

Correlation vs Causation

However he and the other researches stress that the data presented a correlation, and not necessarily a causation.

In other words, the study only looks at CEO personalities, and doesn’t consider other factors that may contribute to the success or failure of an enterprise.

Kaplan says more studies need to be done to find other possible causes.

Yellow Light

Nevertheless, while the Big Five may not be very useful for predicting a CEO’s specific actions and decisions, it could help forecast broader company trends.

Kaplan says the results can serve as a yellow light to corporate boards who automatically embrace potential CEOs with big personalities, assuming he is guaranteed to deliver success for the business.

“Be careful about hiring the person who is open, outgoing, charismatic and expressive. The important thing is to make sure they have a reputation for achievement,” he said.

Questions

1. What is the general, public image of CEOs of large corporations??

2. The university researchers divided the CEOs into five personality traits. True or false? How did they classify and categorize them?

3. Did they identify certain patterns of speech used by the different personalities?

4. Were the initial results surprising?

5. And so the authors are positive (definite) that introverts make better CEOs than extroverts. Is this correct or incorrect?

6. Will this be the final study on the matter? What does Kaplan recommend?

7. What does he mean by “yellow light”? Is there a take home message or lesson from the study?

 

A. What is your image of a successful CEO of a Fortune 500 company?

B. Does your company or organization have a CEO? Describe him or her.

C. What are the roles and responsibilities of CEOs?

D. My and my friends’ goal to is become CEO or president of a company. Yes or no?

E. Are CEOs born or made? What will happen in the future?