Which Factors Predict a Great CEO?

As Glassdoor announces our seventh annual Top CEOs awards across five countries, we had one question: What aspects of a company’s workplace culture as reflected on Glassdoor can help predict a great CEO in the eyes of employees?

In past research, we used CEO approval ratings on Glassdoor as a direct measure of CEO quality in the U.S. In this post, we’ll look across five different countries — the U.S., UK, Canada, France and Germany —to compare what workplace factors in these countries matter most for predicting who will be a highly rated CEO on Glassdoor.  

Key Takeaways:  

  • Across all five countries we examined, great overall senior leadership at the company was the strongest predictor of CEO approval ratings on Glassdoor. Despite differing business culture among countries, the quality of the senior leaders that a CEO chooses to surround themselves with is the single best workplace predictor of CEO approval ratings.
  • Following the quality of senior leadership, the most important predictors of high CEO approval ratings on Glassdoor are a positive business outlook and the quality of a company’s workplace culture and values. Employees view CEOs more favorably when companies have a bright financial outlook, and when they are in mission-driven workplaces with a clear culture and values that emanate from the CEO.
  • Work-life balance was the weakest predictor of CEO approval across all five countries we examined. This is consistent with past U.S.-based research showing a negative correlation between work-life balance and CEO approval ratings. In all five countries examined, most workers appear willing to trade work-life balance in exchange for working with great CEOs.     

What We Did

We are able to use Glassdoor’s unique data on CEO approval ratings as a measure of CEO quality. As part of Glassdoor’s employer review survey, employees can give a CEO rating of approve, disapprove and no opinion.

To get an idea of what predicts a high CEO approval rating, we dive into six workplace factors that are also part of Glassdoor’s employer review survey. These include culture and values, senior leadership, business outlook, compensation and benefits, career opportunities and work-life balance.

To isolate the relationship between these six factors and CEO approval, we ran a linear regression to see which of the following six workplace factors had a statistical impact on CEO approval:

  • Career Opportunities
  • Compensation & Benefits
  • Culture & Values
  • Senior Leadership
  • Work-life Balance
  • Business Outlook

We examined which of these six workplace factors were the most “important” predictors of CEO approval for companies based in the U.S., the UK, Canada, France and Germany using all employer reviews left on Glassdoor in each country as of May 31, 2019. This was done using a “Shapley value” analysis showing which workplace factors have the most explanatory value in terms of the relative contribution of each to the R-squared of each regression.(1)

Under this approach, the six workplace factors can be thought of as a single “pie” in terms of the predictive power of CEO approval. Our analysis shows which pieces of this “workplace culture” pie are most closely linked to employees’ high opinion of CEOs.

What are the Strongest Drivers of CEO Approval?

United States

First, we look at which factors are the strongest predictors of CEO approval in the U.S. The figure below shows the most important workplace factors that drive CEO approval in the U.S. There are three main drivers of CEO approval ratings: How employees view senior leadership is the largest predictor of CEO approval, accounting for 24 percent of this pie; the culture and values of the company are the second largest predictor of CEO approval, accounting for 21 percent; and positive business outlook is the third largest predictor of CEO approval, accounting for 20 percent of the total.

By contrast, career opportunities (15 percent), the quality of compensation and benefits (11 percent) and work-life balance (9 percent) are the least important predictors of CEO approval.

Note: The horizontal axis shows the relative contribution of each factor to CEO rating, where all factors sum to one.

United Kingdom

Next, we look at which factors predict approval rating in the UK. The figure below shows the most important workplace factors that drive CEO approval in the UK. The three main drivers of CEO approval ratings are the same as in the U.S., but in a slightly different order. How employees view senior leadership is again the largest predictor of CEO approval, accounting for 24 percent of this pie. But, unlike the U.S., positive business outlook is the second largest predictor of CEO approval, accounting for 20 percent of the total. The culture and values of the company are the third largest predictor of CEO approval, accounting for 19 percent.

Note: The horizontal axis shows the relative contribution of each factor to CEO rating, where all factors sum to one.

Canada

Next, we look at which factors predict high CEO approval ratings in Canada. The figure below shows the most important workplace factors that drive CEO approval in Canada mirror what we see in the UK: trust in senior leadership is the largest predictor of CEO approval, accounting for 24 percent of this pie. Positive business outlook is the second largest predictor of CEO approval, accounting for 22 percent of the total. The culture and values of a company are the third largest predictor of CEO approval, accounting for 20 percent.

Note: The horizontal axis shows the relative contribution of each factor to CEO rating, where all factors sum to one.

France

Next, we look at which factors predict CEO approval in France. The figure below shows the most important workplace factors that drive CEO approval in France, which follow the same trend as in the U.S.: Senior leadership is the largest predictor of CEO approval, accounting for 30 percent of this pie. This is the largest percentage of the five countries examined. As in the U.S., a company’s culture and values are the second largest predictor of CEO approval, accounting for 22 percent. Positive business outlook is the third largest predictor of CEO approval, accounting for 20 percent of the total.

Note: The horizontal axis shows the relative contribution of each factor to CEO rating, where all factors sum to one.

Germany  

Finally, we look at which factors predict approval rating in Germany. The figure below shows the most important workplace factors that drive CEO approval in Germany. The order of significance of the three top drivers is the same as in the UK and Canada. Trust in senior leadership is the largest predictor of CEO approval, accounting for 25 percent of this pie.  Positive business outlook is the second largest predictor of CEO approval, accounting for 21 percent of the total. The culture and values of the company are the third largest predictor of CEO approval, also accounting for 21 percent.

Note: The horizontal axis shows the relative contribution of each factor to CEO rating, where all factors sum to one.

Conclusion

After examining CEO approval ratings across these five countries, three factors consistently have the biggest impact on approval: senior leadership, a positive business outlook, and strong culture and values. What does this mean for CEOs? For those looking to improve their approval ratings, they should likely start by focusing on these three factors in order to gain the support of their employees.

CEOs must surround themselves with great senior leaders, as they will be evaluated by their employees in part based on the quality of executives they hire and grow.  They must also lead by example when it comes to the culture, mission, and values that matter to the company. Chief executives that embody their companies’ mission and core values are more likely to be seen as great leaders. Similarly, in order to be a highly rated CEO, employees will need to feel optimistic about their company’s business outlook and trajectory.

Check out the full list of leaders who made Glassdoor’s 7th annual Employees’ Choice Awards, honoring the 100 Top CEOs in 2019.

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Footnote: 1) “Importance” of predictors is determined by the relative contribution of each factor to R-squared in our model, averaged over all possible permutations of explanatory variables. This is commonly referred to as “Shapley value” regression in the survey literature and is implemented using the “relaimpo” package in R.