Got around to reading Justin Fox's intriguing Fortune article on measuring CEO performance. Interesting timing, as I've had a number of recent discussions with company leaders about what, precisely, a CEO is supposed to be doing. Some focus on operations, others on strategy; some sit in their offices all day, others are out meeting customers and business partners. However, the bigger the company and the more diffuse its products and customers, the narrower the scope that the CEO can directly impact. In fact, pretty much the only area a large-company CEO can affect overnight is the corporate structure and culture. Sadly, changes in those areas have disparate impacts: Positive changes will yield incremental benefits that take time to accrue into meaningful results; negative changes will stink the place up right away as talented employees flee and morale plummets.
What this means is that a great large-company CEO can have a small positive impact on a company, while a boob in the same role can cause utter havoc. Amidst the rush to hire superstar CEOs, it's sobering to think that a board's most important consideration is ensuring they get someone who won't screw the place up.