UK: What makes a chief executive excel?

UK: What makes a chief executive excel? - Chief Executives' Scorecard

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Last Updated: 31 Aug 2010

Chief Executives' Scorecard

Profitability of companies(1) 0-10% 11-20% 21%+

Number of companies where:

CEO had no qualifications 10 9 0

CEO was qualified 11 19 6

(1) 1990 Pre-tax profits as a % of turnover

What makes for a successful chief executive? Flair or professional qualifications? Ask guru Charles Handy what your average board looks for in their leading figure and he replies: common-sense, character and experience, with a personal introduction from someone known to the board is seen as more valuable than any bit of academic paper. Yet if one is to take a study by William Wood, senior lecturer at Kingston Business School, at face value, UK boardrooms have got it wrong: fancy certificates do count for a lot. In a study of 55 of the UK's largest manufacturing companies, Wood looked to see if group profitability might vary with the formal qualifications (or lack of) of the chief executive. Out of the 55 chefs, 7% were MBAs, 13% accountants, 16% engineers, 29% had another formal qualification and 35% had none at all. Wood found that companies run by a CEO with a formal qualification significantly outperformed others. "Hurrah" for the business schools; "boo" for the School of Life. In addition, despite the common complaint that UK manufacturer's boards tend to lack engineers (and indeed only 34 out of the 55 boards had a qualified engineer) the study found no significant difference in performance by companies with or without such a director. But before the white collar crew chalk that up as a victory, take note: the five companies without a boardroom accountant also did just as well as those which had one.

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