What Makes a Great CEO?
What factors predict high CEO approval? This study provides a new statistical analysis of Glassdoor CEO approval ratings, a unique measure of CEO quality from the employees’ perspective. We show the statistical impact of company culture, CEO characteristics and company financial performance on CEO approval ratings for a sample of large, publicly traded companies in the United States.
Key findings include:
- CEO pay matters: Higher CEO compensation is statistically linked to lower CEO approval ratings on average. However, that effect is lessened when company culture is better.
- Company culture matters: We find that a satisfied workforce is an essential driver of CEO approval ratings on Glassdoor. Three aspects of company culture matter most:
- Opinion of senior leadership;
- View of career opportunities; and
- Quality of compensation and benefits packages.
- Work-life balance is an exception: Surprisingly, one aspect of company culture is negatively related to CEO approval ratings: Work-life balance. Low satisfaction with work-life balance predicts high CEO approval. Although many workers value work-life balance, they appear willing to sacrifice it in exchange for great CEO leadership.
- Founders matter: CEOs who are also their company’s founder predicts significantly higher CEO approval ratings than being an externally hired or internally promoted CEO.
- Performance matters: CEOs of more profitable companies receive higher approval ratings on Glassdoor, even after statistically controlling for the impact of other factors such as industry and company size.
- Gender and other personal characteristics matter less: Gender, age and education of CEOs have little effect on CEO approval ratings once other factors are accounted for.
To learn more, read the full study, What Makes a Great CEO?, and the press release summarizing the research. For employers and CEOs, learn more in the new eBook, Glassdoor’s Guide to Great Leadership.
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