New INSEAD study ranks best-performing global CEOs 2013

INSEAD, the leading international business school, today released its detailed ranking of 100 of the world’s most accomplished chief executive officers across diverse industries and regions. The report, titled “The Best-Performing CEOs in the World”, builds on a global project initiated by INSEAD in 2009, in partnership with Harvard Business Review, which will publish the research results online today at http://hbr.org/2013/01/the-best-performing-ceos-in-the-world/ar/1 and in its January-February 2013 edition. The report is also featured in INSEAD Knowledge (http://knowledge.insead.edu).

Created by INSEAD faculty Herminia Ibarra, the Cora Chair Professor of Leadership and learning, Professor of Organisational Behaviour at INSEAD, Morten Hansen, Professor in Entrepreneurship at INSEAD and the University of California, Berkeley, and Urs Peyer, INSEAD Associate professor of Finance, assisted by INSEAD research associate Nana von Bernuth, the ranking identifies objective measures of CEO success – notably shareholder return and changes in market capitalisation – to examine leadership success over a longer time horizon.

“We wanted to create a straightforward but rigorous and useful tool to explore CEO performance in the real world and over time,” said Ibarra, the Cora Chaired Professor of Leadership and Learning. She and her co-authors examined several factors that could contribute to performance success, such as whether CEOs were company insiders or hired from outside the organisation, or whether they had earned an MBA degree. “Our approach differs from rankings that draw on CEO ‘celebrity’ or popularity as a metric. We took a hard look at some fundamental data to arrive at our conclusions.”

In addition, the INSEAD study offers a truly international assessment of CEO performance, reflecting the global nature of business today. The 2012 scorecard includes about one-third more CEOs than the earlier version—a total of 3,143 compared with 1,999 in the previous survey. These numbers reflect a group representing 64 nationalities and companies based in 37 countries.

“For decades, most studies of this kind have been very US-centric, leaving out much of leadership’s global diversity”, said Hansen. “Our study marks an important advance by taking a holistic look at leadership worldwide.”

The ranking reveals some surprises about CEO leadership: Despite China’s great economic growth in recent years, its CEOs scored an average of 176 places lower than their US counterparts. Only three Chinese CEOs cracked the survey’s top 100. Less surprising, given Japan’s economy, its CEOs ranked, on average, 562 places lower than their US peers. Brazilian chief executives, on the other hand, did especially well, garnering 9% of the top 100 spots while making up just 4.5% of the total sample.

Overall, the top 100 CEOs on the list delivered, on average, an impressive total shareholder return of 1,385% during their tenures and increased their firms’ market value by $40.2 billion. At the other end of the spectrum, the bottom 100 produced an average return of -57% and lost $13.6 billion in market value.

The best of the best, based on returns and market value change, include some familiar names: Steve Jobs, the former Apple CEO, again ranked No. 1, followed by Amazon’s Jeffrey Bezos (2), Samsung Electronics’ Yun Jong-Yong (3), Vale’s Roger Agnelli (4) and Gilead Sciences’ John C. Martin (5). The sole female CEO ranked in the top 10 was former eBay CEO Margaret Whitman (9), who also ranked No. 1 in the survey’s top female CEOs, while Agnelli scored the top spot on the Latin American regional segment. Earning the No. 1 place among European CEOs was Graham Mackay of SABMiller, while in India the honour went to ITC chief Y.C. Deveshwar. Air China CEO Li Jianxiang won the distinction in that country.

To be eligible for the “Best-Performing” list, CEOs needed to be in their role for at least two years. To ensure reliable and sufficient data, the INSEAD researchers excluded CEOs who assumed the job either prior to 1995 or after August 31, 2010.

The new research provides a variety of data to help define factors that contribute to exceptional leadership. For example, CEOs with an MBA, on average, ranked 40 places higher, and insider CEOs ranked 154 places higher. More interestingly, however, is that the importance of those factors varies between regions. For example, in Continental Europe, China, and India, insider CEOs did not outperform outsider CEOs.   Industry variations seemed to exert minimal influence on CEO success, the researchers found. The study also helps understand the relationship between CEO performance and their organisation’s corporate social responsibility (CSR) initiatives. Some top CEOs did well by embracing CSR; others excelled without doing so.

“The ranking is  based on long-term CEO performance, examining multiyear results – performance during the CEOs entire tenure, or if still in office until the end of 2012”, according to Peyer, INSEAD Professor of Finance. These metrics provide a way to measure long-term CEO success and thus offer a framework that encourages sustainable strategic vision, he said. “The default in business is to manage what you can measure,” Peyer added. “Good leadership is essential for sustainable value-creation and progress, and assessing quantifiable aspects of CEOs is one important way to cultivate more such leaders.”

The INSEAD Best-Performing CEOs study was first published in January 2010, followed in January 2012 by a regional ranking of 400 CEOs from India’s publicly traded companies - in March 2012, a survey of 300 CEOs in Latin America and, July 2010 a ranking of 500 Chinese leaders. The 2012 survey’s complete findings are available here http://hbr.org/2013/01/the-best-performing-ceos-in-the-world/ar/1 and in the January-February Harvard Business Review where they are accompanied by an article explaining more about the study’s implications and methodology.