CEO leadership drives up to 45% of company performance: study
However, many CEOs find it challenging to engage with their board and make difficult resource allocation decisions.
A CEO’s leadership can account for up to 45% of a company’s performance, according to new findings from McKinsey’s CEO Excellence Assessment Tool.
The study, which surveyed more than 100 CEOs across 17 industries, sheds light on where top executives feel most confident—and where they struggle the most.
CEOs generally excel in setting vision and strategy, staying personally effective, and mobilising leadership teams.
However, the study also reveals that many CEOs find it challenging to engage with their board, make difficult resource allocation decisions, and effectively manage stakeholder relationships—critical areas that can impact long-term success.
These challenges suggest that whilst many leaders have a clear sense of strategic direction, they may lack the structural and interpersonal skills necessary to implement their vision effectively.
CEOs rate themselves highest in staying personally effective, remaining humble, and managing their time and energy well. They also excel in setting a clear company vision and strategy for long-term success and building and mobilising strong leadership teams to execute company goals.
Maintaining personal effectiveness is particularly critical, as CEOs often face relentless demands that require mental agility, resilience, and the ability to manage competing priorities. Despite these strengths, CEOs struggle the most with engaging their boards effectively, with many feeling unsure about leveraging board expertise.
They also find resource allocation difficult, particularly making tough calls on shutting down or scaling initiatives, and they face challenges in stakeholder management, which directly impacts business performance.
When it comes to leadership performance, McKinsey said CEOs perform well in vision and strategy but struggle with resource reallocation. Many admit they underutilise board members' expertise, whilst they feel confident about company culture and structure but less so about talent management.
Most CEOs are comfortable leading teams and fostering collaboration, yet whilst they acknowledge the importance of external relationships, many find them challenging to navigate. CEOs feel strongest in their leadership mindset but note difficulties in managing time and energy effectively.
Women CEOs self-assess higher than men in stakeholder engagement and culture-building, whilst men score higher in vision, strategy, and resource allocation.
McKinsey noted this suggests that women leaders may place greater emphasis on fostering a collaborative and inclusive corporate environment, whilst their male counterparts may be more focused on high-level decision-making and strategic execution.
More experienced CEOs rate themselves higher in board engagement and stakeholder relations, whilst newer CEOs improve significantly through training. CEO mentorship and leadership development programs help drive improvement across all six leadership dimensions, especially for early-tenure CEOs.
The study underscored the importance of professional development and continuous learning in helping CEOs enhance their leadership effectiveness.
The study also found that training and mentorship programs play a crucial role in boosting CEO performance, with newer CEOs showing the most significant improvements after engaging in structured learning opportunities.
In particular, early-tenure CEOs benefited from training in board engagement and stakeholder management—two areas where many leaders initially struggle. The ability to seek guidance from seasoned executives and industry experts appears to be a critical success factor in developing well-rounded leadership capabilities.
McKinsey suggested structured training, mentorship, and self-assessment tools to help CEOs close key leadership gaps.
With the role of the CEO being a significant driver of corporate success, enhancing board engagement, strategic resource allocation, and stakeholder relations will be essential for long-term business performance.
The findings highlighted the need for organisations to invest in leadership development programs that provide CEOs with the tools, frameworks, and mentorship they need to succeed.
