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Harvard Business Review Top 100 Best-performing Ceos in China 2018

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A lot of people have blamed short-term thinking for causing our current economic troubles, which has fix off a debate about what time window we should use to appraise a CEO's functioning. Today boards of directors, senior managers, and investors intensely want to know how CEOs handle the ups and downs of running businesses over an extended menstruation. Many executive bounty plans define the "long term" equally a three-year horizon, merely the real test of a CEO's leadership has to exist how the visitor does over his or her full tenure.

This commodity contains the first ranking that shows which CEOs of large public companies performed best over their entire fourth dimension in office—or, for those withal in the chore, up until September 30, 2009. To compile our results, we collected data on shut to 2,000 CEOs worldwide.

It may come every bit no shock that Steve Jobs of Apple tops the listing. However, our ranking does comprise a few surprises. Yous'll see some relatively unknown faces at the acme. The inverse is likewise truthful: Some obvious candidates in terms of reputation don't make the tiptop 50, which we're printing in this issue—or fifty-fifty the top 100 or top 200. (To view the superlative 100 and admission a listing of the elevation 200, go to hbr.org/top-ceos.) In fact, our list overlaps very little with lists of the most-admired or highest-paid CEOs.

Do Nosotros Gloat the Wrong CEOs?

Women CEOs: Why So Few?

When we analyzed the data to run across which factors increased the likelihood that an executive would rank high, we uncovered a few more surprises. Although i might expect context to take a large effect, nosotros found a wide diversity of countries and industries represented among the summit performers. The CEO's background did matter, yet, as did the situation left behind past his or her predecessor.

Our data highlight the great extent to which CEOs business relationship for variations in company functioning, beyond those due to industry, land, and economic swings. That drives home how important information technology is to apply objective, long-term measures to assess CEOs and to inform CEO searches and succession planning.

How Did We Judge Performance?

To create our ranking, we identified the CEOs of all publicly traded companies that had made Standard & Poor's Global 1200 or BRIC twoscore lists since 1997. Considering companies from Brazil, Russian federation, Republic of india, and China in our inquiry was critical, given the growth in emerging economies. To be included, a CEO had to have assumed the task no earlier than January 1995 and no later than December 2007. (Run into the sidebar "How the Ranking Was Created.") That'due south one reason why y'all won't discover CEOs such as Jack Welch, Warren Buffett, Larry Ellison, and Beak Gates here. They all took the captain earlier 1995, though they probably would have done well if included.

All told, 1,999 CEOs made our kickoff cut, and of those, 731 were still in role on the date we stopped measuring performance. The unabridged grouping represented 48 nationalities and came from companies based in 33 countries. The median age at which these executives had go CEO was 52, and those even so in office had an average tenure of six years. Only 1.v% were women, and but 15% of the CEOs worked for companies based in a country that was not their country of origin. It is notwithstanding not a global labor market for primary executives.

So we looked at the list of 1,999 executives and asked, Who led firms that, on the basis of stock returns, outperformed other firms in the same country and industry? Our ranking combines three measures: country-adapted render, manufacture-adapted return, and change in market capitalization during tenure. Of grade, shareholder return is not the only measure of performance, and it omits contributions companies make to a wide group of stakeholders. Just it is the fundamental scorecard for CEOs of public companies. And it's the same scorecard for anybody.

Just How Expert Were the Elevation CEOs?

Every bit a leader, you had to produce remarkable performance to brand it into our top 50. On average, those CEOs delivered a total shareholder return of 997% (adjusted for commutation-charge per unit effects) during their time in office. That translates into a spectacular annual return of 32%. Subtracting manufacture effects, the annual return is 30%, and country furnishings, information technology's 29%. On average the top 50 increased the wealth of their companies' shareholders by $48.ii billion (adjusted for inflation, dividends, share repurchases, and share problems). Now compare that with the average performance of the 50 CEOs at the bottom of the full list of i,999, who during their tenures produced a full shareholder render of -70%, which corresponds to an almanac render of -twenty%. On average these poor performers presided over a loss of $eighteen.3 billion in shareholder value.

On average the meridian fifty CEOs increased the wealth of their shareholders past $48.ii billion.

The #1 CEO on the list, Steve Jobs, delivered a whopping iii,188% manufacture-adjusted return (34% compounded annually) after he rejoined Apple tree equally CEO in 1997, when the visitor was in dire shape. From that fourth dimension until the end of September 2009, Apple's market value increased past $150 billion.

The #2 CEO, Yun Jong-Yong, ran South Korea'southward Samsung Electronics from 1996 to 2008. Yun is an instance of a leader who has stayed out of the limelight. During his tenure he capably transformed Samsung from a maker of memory chips and me-too products into an innovator selling digital products such as leading-edge cell phones. Under Yun shareholder wealth increased by $127 billion, and the full industry-adjusted return was 1,458%.

Yun is also the #1 performer amid the executives who have completed their tenure. For this group, the track record is in. For current CEOs, in contrast, we demand to be cautious; their tape could modify a lot.

Another superlative performer who has kept a strikingly low contour is John Martin (#six), who has led Gilead Sciences, a California-based biopharmaceutical company, since 1996. During his tenure he delivered an industry-adapted return of two,054%, or 26% on an annualized ground. Described equally a "quiet leader," Martin is figuring out how to make lifesaving drugs available in developing countries. He presided over the development of Gilead's one-pill-per-day AIDS drug and also the antiviral drug Tamiflu.

Did Star CEOs Make the Cut?

When nosotros compared this list with others rating CEOs, one of the almost interesting things we noticed was who didn't appear on our list. Take the Barron'southward 2009 listing of the thirty most respected main executives in the world, which a group of editors had selected after speaking with investors, analysts, and executives. Five executives announced in both the Barron's list and our tiptop xxx: Steve Jobs of Apple, John Chambers of Cisco, Jeff Bezos of Amazon, Hugh Grant of Monsanto, and Terry Leahy of Tesco. But several CEOs that were "most respected" according to Barron'southward are nowhere near our top 50 (or even our elevation 200)—namely, Jamie Dimon of JPMorgan Chase, Satoru Iwata of Nintendo, Sam Palmisano of IBM, and Rex Tillerson of Exxon Mobil.

Many other celebrity CEOs also failed to make the cutting, including Carlos Ghosn of Renault-Nissan, Sergio Marchionne of Fiat, John Mack of Morgan Stanley, Jeffrey Immelt of General Electric, Daniel Vasella of Novartis, and Robert Iger of Walt Disney. Some of these well-known CEOs have not necessarily done poorly; they're simply not among the acme performers in the earth according to the total shareholder render they've delivered so far.

When we looked at lists of the highest-paid CEOs in America, we institute little overlap with our list of the top 50 performers.

When we looked at rankings of the highest-paid chief executives in America, we as well plant petty overlap with our top 50. This might exist due to dissimilar fourth dimension frames; although we cover the CEOs' long-term performance, some lists cover annual compensation just. Nevertheless, it's interesting that none of the people on the Associated Press listing of the 10 highest-paid S&P 500 CEOs for 2008, for example, are in our top l. At that place is, nevertheless, a flake of overlap with rankings that look at longer compensation time frames. V of the 50 highest-paid CEOs in Forbes magazine's overview of 2003–2008 CEO compensation announced in our top l. One of the five is Steve Jobs, who was the third-highest-paid CEO on that list; some other is John Chambers (the sixth-highest paid), who is our #4 peak performer. Nevertheless, the relationship betwixt making the lists of virtually-admired and highest-paid CEOs and placing in the superlative 50 (or fifty-fifty the top 200) on our long-term-functioning ranking seems tenuous at best.

What Helps a CEO Perform Well?

If you're a newly appointed CEO, how much does the state of affairs that you lot inherited or your own background predict your placement in the ranking? Our assay teased out some insights into the factors that matter. While far from exhaustive, these insights can inform today'south debates.

Land and manufacture.

A quick glance at the list reveals how geographically widespread strong operation is; no i land dominates the list. CEOs from U.S.-based companies fill nineteen, or 38%, of the slots on our peak fifty list, simply that is not unexpected, since 42% of the 1,999 CEOs in the study were from U.Southward. companies. Xvi countries are represented in the top fifty, while 25 countries are represented in the pinnacle 200. CEO performance doesn't cluster heavily in either free-market place-oriented countries or emerging markets. In fact, our assay shows that only eight% of the variance in CEO operation in the ranking tin can be attributed to country-past-country differences.

While we noticed some clustering of operation past industry, our analysis showed that 11% of the variance in performance could exist attributed to the industries the CEOs came from. Some industries are overrepresented in the top 200—notably, energy, telecommunication, wellness-care equipment and providers, and retailing. Only 4% of the entire grouping nosotros studied came from the energy industry, but 12% of the top 200 slots are filled past CEOs from energy companies. Though it is non surprising that the energy sector is overrepresented, it is revealing that some low-growth industries, such as retailing, are well represented, too. This shows that CEOs can attain exceptional performance even if they're not in a booming manufacture.

Some low-growth industries, such equally retailing, withal produced peak CEO performance.

Although half-dozen of the top 10 CEOs come from companies that are in the IT industry or are internet-based (Apple, Samsung, Cisco, Amazon, eBay, and Google), such high-tech companies are not overrepresented in the peak 200. It'due south no shock to find many CEOs from the machine, automotive-components, and media industries in the lesser of the study group. A few CEOs from the auto sector did very well, however. For example, Chung Mong-Koo of Hyundai is #29 on our list. (Unfortunately, his reputation has been diminished by a 2007 conviction for embezzlement, for which he received a suspended sentence.)

Beingness an insider.

Whether outsiders or insiders make better CEOs is a topic of much contend. One piece of conventional wisdom is that outsiders are more than capable of instilling alter and improving results, especially at underperforming companies, considering they are more objective and appreciative to fewer internal stakeholders and sacred cows. A good case of outsider success is #xix on our list, John Thompson. In 1999 he left his job at IBM to become the CEO of Symantec, a visitor experiencing lackluster performance, and during his 10-year tenure transformed information technology into a standout.

The alternative view, espoused by Harvard Business organization School's Joseph Bower and Rakesh Khurana and other direction researchers, is that tapping insider talent for the CEO'due south office is the meliorate pick. They argue that outsiders are expensive and that industry- and business firm-specific knowledge is critical when it comes to generating long-term growth. Among the upward-through-the-ranks leaders on our list are Yun Jong-Yong, who joined Samsung directly out of college and worked there xxx years before becoming CEO, and Mukesh Ambani (#five), who joined Reliance Industries in 1981, when it was still a textile company run by his begetter.

CEOs who were promoted from inside the company tended to accept stronger performance than those brought in from the exterior.

In our analysis of the 1,999 CEOs, however, we determined that insiders tend to do better. On average, they ranked 57 places college than outsiders in the full list. Troubled companies were more likely than other firms to tap outsiders to exist their main executives. Thirty-vii percent of the companies whose returns were -46% or worse during the 2 years prior to a new CEO's appointment chose an outsider for the top task, whereas 21% of all companies in the sample did. However, when we compared the results of CEOs who took over underperforming companies, the outsiders did no amend than the insiders.

Having an MBA.

In the aftermath of the financial crunch, pundits criticized MBAs, arguing that business organization schools had fostered destructive greedy behavior and taught executives the wrong models of management. So we decided to see whether CEOs with MBAs did whatever better or worse. When we looked at the CEOs from companies based in Germany, Britain, France, and the United States, where reliable data on degrees is available (one,109 CEOs in total), nosotros plant that the 32% of CEOs who had an MBA ranked, on average, twoscore places better than the CEOs without an MBA. Even in the beleaguered financial sector, the MBAs tended to rank ameliorate than the non-MBAs. This finding suggests that MBA CEOs have not destroyed value, as some critics would have it.

A runway for performance.

As a CEO, are y'all more likely to produce stellar performance if you inherit a struggling company from a mediocre predecessor? Or if you take over a potent visitor from a successful predecessor? Many would argue that a strong company is the best platform for generating superior results. We plant that to be far from the case. The boilerplate rank of the CEOs who took over companies that performed poorly in the two years earlier they entered the job was 96 places better than the average rank of those who took over firms with keen prior functioning.

This difference in rank becomes even wider when nosotros wait at the predecessors' unabridged tenure. According to our analysis of the 790 companies for which we had data for both the predecessor and the successor, a stellar predecessor usually does not provide a good runway for his or her successor. On average, CEOs who took over from predecessors ranked in the top 50% of the overall group of one,999 came in 583 places below those who didn't. For example, John Bowmer (#143 on our listing), the successful CEO of Adecco from 1996 to 2002, was succeeded by Jérôme Caille, who was reportedly asked to leave three years later amid disappointing results. Adecco'south performance nether Caille placed him quite far down the ranking. Overall, we found few cases in which a highly ranked CEO passed the baton to a successor who was as well highly ranked. Taking over from a low base presented a better opportunity for stellar CEO performance.

The golden standard.

Because success seems so difficult to sustain, perhaps the best measure of a CEO's operation should go beyond his or her fourth dimension in office. But most measures of operation, ours included, don't look at whether a CEO leaves behind a strong or a weak company. The ultimate gilt-plated list, so, would incorporate CEOs whose companies performed well not just during their tenure only later information technology. To construct such a ranking, nosotros extracted from our database the executives who retired from their postal service three or more than years agone, arriving at a list of 803 CEOs, whom we then ranked according to their company's performance during their tenure and for the 3 years after their departure. (See the list "Whose Companies Performed Well Later on They Left?")

While CEO rankings have exploded into a cottage manufacture, they haven't really improved our agreement of what drives CEO success, because of the continued fixation on short-term performance and the paucity of data on CEOs outside the U.Southward. In compiling this list, we've tried to overcome those two obstacles. Nosotros believe that examining CEOs' contributions through a longer-term lens will give us a clearer view and better insights.

The acme 50 list shows that no country or manufacture has a corner on operation. But taking a longer perspective did bring to low-cal a number of "hidden gems"—placidity CEOs who delivered outstanding results year in and yr out, away from the glare of the comprehend stories and business schoolhouse case studies. Their success makes a persuasive argument for a new approach to evaluating CEOs. Only by analyzing performance over their tenure and beyond tin can we begin to understand the nature of swell leadership.

A version of this commodity appeared in the January–Feb 2010 effect of Harvard Business concern Review.

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Source: https://hbr.org/2010/01/the-best-performing-ceos-in-the-world

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