blog title image for you purchase successful leadership?  This question along with several others sparked an article by Adam Vaccaro, a freelance business journalist.  In his article titled “You Don’t Have to Break the Bank to Hire an Effective CEO”, Vaccaro explores a report from Wharton and EMLYON business schools.  This report unpacks researchers’ study of past reports as well as new findings on the link between CEO pay and performance.  Not surprisingly, the research shows that pay and performance are not always linked.  Going deeper, the researchers looked into why.

CEO Evaluation is the key element of the Wharton and EMLYON report.  In the study, the researchers looked at several common practices.  Vaccaro cites an example from the study showing that awards are often used as a determinate of success, but sometimes do not translate into practice.  Vaccaro writes, “CEOs often receive a pay raise after winning an award or garnering positive press. The size of these raises might increase their salaries to more than 40 percent above those of their peers. But CEOs who received raises for winning awards fared worse than peers at comparable companies who didn’t get raises . . .”.  He also points out that the report found research showing evaluation of executives on factors that could only be considered luck – economy changes for example.  Finally Vaccaro mentions biases.  Though companies would not admit it, biases play a large role in executive recruitment.  All this to say, the research shows companies need to reexamine how CEOs are hired as well as compensated.

What does the research suggest?  You might not believe it, but they offer a radical idea borrowed from our government; a sealed bid.  Vaccaro explains, “. . .this would involve asking recruiting firms to submit their recommendations with minimal identifying information about the candidate. Instead, you ask only for a list of the candidate’s skills and qualifications and the salary requested. No face-to-face interview, and thus no opportunity to be clouded by bias.”  Vaccaro calls this method an “empirical approach.”   He offers a second option: promoting a leader from within.  In a separate study, this method was effective, demonstrating that internal promotions come with a sense of loyalty and often small salary requests.  The best option doesn’t always have to break the bank.  Successful leadership, as Vaccaro points out, “might come from right under your nose.”