New Research: The Formula for Being a Great CEO

August 24, 2016

There’s no shortage of books, articles and studies offering advice on how to become a great corporate leader. However, many of them beg the question: How do you measure who is a good or bad CEO? What about them makes them a great or not-so-great leader?

Each year, Glassdoor recognizes the Highest Rated CEOs, according to those who know them best – the employees. What are the ingredients that make these and other favored CEOs great?

That’s the subject of our latest research study, What Makes a Great CEO? In it, we provide a new statistical analysis of CEO approval ratings from Glassdoor, a unique and direct measure of CEO quality from the perspective of those who work most closely with them: company employees.

Lessons from the Data

What factors contribute to highly rated CEOs on Glassdoor? Here are the main takeaways from our study:

CEO pay matters: Higher CEO pay is statistically linked to lower CEO approval ratings on average. However, that effect is lessened when company culture is better.

[Related: Average CEO Earns 204 Times Median Worker Pay]

Company culture matters: Having a satisfied workforce is an essential driver of CEO approval on Glassdoor. Three features of company culture stand out as mattering most for CEO quality:

  1. How employees view senior leadership at the company
  2. Whether employees feel they have upward career opportunities
  3. How employees rate their compensation and benefits packages

Work-life balance is an exception: Interestingly, we found that low satisfaction with work-life balance predicts high CEO approval. Although most employees value work-life balance, the data show that they’re willing to sacrifice it in exchange for a visionary leader.

[Related: Does Money Buy Happiness?]

Being—or acting like—a founder matters: CEOs who are also their company’s founder enjoyed significantly higher CEO approval ratings on Glassdoor, compared to externally hired or internally promoted CEOs. The passion and drive of founders is something all CEOs should strive to emulate.

[Related: 5 Founder CEOs You Wish You Worked For]

Performance matters: CEOs of more profitable companies are higher rated on Glassdoor, even after we statistically controlled for many other factors like industry and company size.

Gender and other personal characteristics matter less: We found gender, age and education of CEOs have little effect on CEO approval ratings after other factors are accounted for. Employees seem to largely put these factors aside, and rate CEO quality based more on company culture and performance.

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.