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What Executive Search Consultants Need To Ask CEO Candidates

 

This fascinating article in the Harvard Business Review looks at the relationship between the performance of CEOs and how much time he or she spends playing golf.  The result?  The average CEO in the sample plays 16 rounds per year.  However, the frequency varies with with 25% of those surveyed recording 40 rounds a year, and several playing more than 100 rounds in a year.

 

The researchers then look at average Return on Assets and compare this to time spent playing golf.  The CEO’s that make up the top 25% by frequency of golfing deliver an average ROA which is more than 100 basis points lower than the remainder of the sample group.

 

Finally, the researchers investigate CEO tenure.  The result?  The more time the CEO spends playing golf, the shorter his or her tenure.

 

So, clearly, this is something that should be factored in to your shortlisting process.  Volume of time on the golf course is a key question to focus on.  As an aside, I’ve played golf twice in my life and – on both occasions – struggled to make contact with the ball.  I’ll be asking my Board for a pay rise.

The average return on assets (ROA) is over 100 basis points lower for the CEOs in our sample who were in the top 25% of most-frequent golfers. A similar relation exists between CEO leisure consumption and firm market capitalization, which suggests that shareholder wealth is also negatively affected by the time CEOs spent on the fairways and greens.

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