CEO charisma found to fail the bottom line

By Ted Griffith
Wilmington, Del.) News Journal

Those larger-than-life CEOs generally aren't worth the larger-than-life paychecks they collect, according to research done by Vilmos Misangyi, a University of Delaware assistant business professor.

Misangyi has devoted himself to the subject of chief executive charisma and the role it plays in a corporation's performance. It may seem an odd field for study, but the topic has gained increased currency in the wake of scandals at Enron, WorldCom and other major corporations.

Misangyi and other academics believe charismatic CEOs often abuse their powers of persuasion to enrich themselves at the expense of companies and shareholders.

"We're very receptive to hero worship, to charisma," said Misangyi, 40, who teaches courses on corporate strategy. "But unless there is some substance behind the CEO's style, you're not going to get what you've been sold."

For the most part, companies with charismatic CEOs don't fare any better than those with dull leaders, he said.

A study he collaborated on two years ago found that over a 10-year period, companies with charismatic CEOs didn't turn in better financial performance than companies with low-key leaders. However, charismatic CEOs did reap millions more in annual pay, the study found.

Misangyi deemed a CEO charismatic when he or she is perceived to be energetic, inspirational and visionary. His research team assessed a CEO's charisma by surveying employees at 59 major U.S. companies.

Misangyi declined to discuss specifics, such as which CEOs were found to be charismatic, saying he didn't want to compromise the confidentiality of the employee surveys.