America's global companies: a leadership profile - characteristics of chief executive officers

Business Horizons, Jan-Feb, 1993 by G.R. Bassiry, R. Hrair Dekmejian

The debate about the functional importance of individual leadership in organizations and society as a whole has had a long history both in business and politics. To such major exponents of leadership as Thomas Carlyle and Max Weber, leaders constituted the architects of history; to such historical determinists as Georg Hegel and Karl Marx, leaders were only cogs under the control of powerful socioeconomic forces. In the business world, John Kenneth Galbraith tended to discount the role of corporate leaders in organizational effectiveness.

Despite Galbraith's cogent critique of corporate leadership in contemporary American business life, leaders continue to be perceived as the shapers of the destinies of their companies--as judged from the increasingly large financial rewards they have commanded in recent years. It is ironic that at a time of decreasing American fortunes in the competitive world economy, the 800 individuals who run the country's largest global corporations earned $782 million collectively in 1988 (Duggan et al. 1989).

Purpose and Methodology

Despite the perceived importance of business leaders, there has been a surprising paucity of systematic studies on the aggregate social background characteristics of top corporate managers. With the exception of yearly compilations of data on corporate executives in Forbes, Fortune, and other business magazines, only a handful of scholars have conducted empirical studies on corporate elites.

This study seeks to develop an aggregate profile of the individuals leading America's 800 largest companies as listed in Forbes (1989). These corporations employ a total of 20 million workers and generate $3.2 trillion in revenues. These companies are overwhelmingly multinational in character. As an index of their "multinationality," it can be noted that almost all of the U.S. firms listed among Business Week's 1990 Global 1,000 international companies were included in our sample.

The utility of such an aggregate profile is manifold. Students of leadership will be interested in shedding light on the dominant background characteristics of the elite, their homogeneity, and behavioral patterns. Moreover, constructing an aggregate profile would go a long way toward answering a set of key questions on the interrelationship between several elite attributes: What are the determinants of success in corporate life? How important is a college education for corporate management? What occupational pathways are most likely to lead to the top? Are typical American CEOs loyal company men or frequent job hoppers? And finally, what factors determine corporate pay?

An empirical methodology is employed here, using both descriptive and statistical analysis. The profile is based on categories of such data as age, birthplace, education, professional background, tenure, salary, and other forms of compensation. Biographical data on the 800 CEOs were collected from Forbes (1989), as well as from the Reference Book of Corporate Management (1988) and Standard & Poor's Register of Corporate Directors and Executives (1988). Among these CEOs are such well-known personalities as Lee Iacocca of Chrysler, Lodwrick Cook of Atlantic Richfield, Alden Clausen of Bank America, Michael Eisner of Disney, Roberto Goizueta of Coca-Cola, John Akers of IBM, Donald Petersen of Ford Motor Company, Hamish Maxwell of Philip Morris, and Lawrence Rawl of Exxon.

Age: Is Youth a Factor in Corporate Leadership?

Youth is not an important factor in American corporate leadership. By the time corporate leaders became CEOs, 80 percent were in their 50s and 60s (see Figure 1). On balance, there was a concentration of CEOs in the middle levels of the age ladder--approximately 46 percent (370 CEOs) were in their forties; only about 15 percent (126) were in their forties, and 35 percent (276) were in their sixties. The median age was 57 with a mean of 56.5 and a mode of 62.

Birthplace: Are Easterners Still Dominant?

The data on place of birth is broken down into four categories: geographic region, state, city, and urban versus rural.

In regional terms, the Northeast and Midwest led the list of CEO birth places with 37 percent and 31 percent, respectively. Together, these areas represented 68 percent of the total, a slight increase from a Fortune study conducted in 1986 (McComas 1986). Relatively few CEOs were born in the South (19 percent) and the West (7 percent). It is noteworthy that 44 CEOs (6 percent) were born outside the United States, mostly in Britain, Germany, Australia, China, and Canada (see Figure 2). This finding might be regarded as one of several indices of the internationalization of American business and of its leading cadres. Yet to some Americans who are worried about foreign control of U.S. businesses, the finding that 6 percent of CEOs are foreign-born might represent an ominous sign.

Another approach to analyzing the regional data is to group together CEOs born in large urban centers, in contrast to those born in small towns and rural areas. Surprisingly, 53 percent were born in large cities while 41 percent came from small towns and rural regions--perhaps laying to rest the conventional assumption that being from the "sticks" is a detriment to corporate advancement (see Figure 3).