Sound management, effective decision-making skills, industry knowledge and a complete understanding of the entire company are qualities leading business executives exhibit. But what distinguishes a great CEO from a good one? A 10-year study on executive transitions by consulting firm Navalent finds that business leaders who develop impactful relationships tend to outperform the rest.
Navalent interviewed over 2,700 executives and identified four highly-correlated dimensions that great executives possess, while good business leaders typically only excel in two or three of these categories.
The four dimensions that define today’s best business leaders are:
- Knowing the whole business – broadening exposure to the whole organization and knowing how the business creates value and delivers results.
- Making accountable and balanced decisions – possessing the ability to establish priorities, engage other’s ideas and weigh alternatives.
- Knowing their industry – having knowledge of competitive threats and wider economic, technological and customer trends.
- Forming deep and trusting relationships – developing substantive connections with superiors and peers, and establishing a positive reputation.
Though the four abovementioned dimensions are highly interrelated, establishing quality relationships proves to be the most vital characteristic of them all. Leading CEOs establish trust with colleagues, are approachable and meet the needs of key stakeholders, whereas second-rate leaders manage perceptions and mask self-interested motives under the guise of collaboration.
There are plenty of studies on executive behavior that highlight the importance of healthy relationships. One study by Douglas Riddle, Ph.D., reiterates the importance of solid business relationships, finding that failed relationships account for a significantly high percentage of overall executive failure. Another study by Vantage Hill Partners concludes that fear accounts for 60 percent of executives’ bad behavior, undermining executive team relationships and ultimately corporate strategy.
None of us, CEO or not, can claim perfection in all four behavioral dimensions, but we can strive to embody the characteristics of high-performing executives. Ron Carucci, Co-Founder and Managing Partner of Navalent, points out that exceptional executives lead “with a humble confidence that graciously extend[s] care to others.” While unassuming confidence and showing care may be the underlying attributes to overall effective leadership, they are difficult to master. Be patient, character growth is a life-long task.