Wednesday, 07 July 2010 13:00

Technology CEOs Report - Education Featured

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PATTERNS DETECTED

CEOs are highly educated

Degree distribution by company size

  • 43% of CEOs with advanced degrees have MBAs (33% of all CEOs have MBAs)
  • 21% of all CEOs have PhDs

CEOs in larger companies differ from those in smaller companies as follows:

  • Larger company CEOs are more likely to have an advanced degree (88% vs. 64% for companies between $100 M and $1 B)
  • A larger portion of big company CEOs with advanced degrees have MBAs (55% vs. 24% for companies between $100 M and $1 B)

CEOs with technical degrees predominate (59% of all CEOs in our study) and these are more likely to have advanced degrees.

Level of Degree by type - technical

CEOs with Ivy League degrees were in the minority (40%) but over-represented - not a surprise given the preponderance of Ivy Leaguers in New England.

  • They are less likely to have technical backgrounds (33% vs. 68% for non-Ivy League CEOs)

SO, WHERE WERE THE DIFFERENCES?

Not Surprisingly, growth rates were lower at larger companies (61% vs. 93% median 3-year growth rates)

CEO performance by company size

MBAs outperform non-MBAs at companies under $1 B in revenue (159% vs. 89% median 3-year growth rates)

MBA vs. Non-MBA Performace Comparison Company revenue $100m to $1b

For companies over $1 B in revenue, the results were much closer, 61% for CEOs with MBAs vs. 70% for CEOs without MBAs.

The companies with CEOs holding technical degrees outperformed companies with CEOs who didn’t (99% and 101% vs. 71% median 3-year growth rates)

Technical vs. Non-technical performance comparison all companies

Even though the median 3-year growth rate was close for technical CEOs whether they had a BS or higher degree, the maximum growth rate CEOs with just a BS degree was over 8000% – a company that grew from $3.6 M to $306 M in 3 years. This outlier underscores the value of identifying and taking advantage of technology trends, which often requires a technical background.

In companies over $1 B in revenue, the technical degree premium was even more striking (99% vs. 47% for companies whose CEOs had non-technical degrees)

Technical vs. non-technical performance comparison - company revenue greater than $1b

Companies whose CEOs have Ivy-League degrees significantly outperformed companies of CEOs without (287% vs. 86%)

Ivy vs. non-ivy performance comparison company revenue $100M to $1b

KEY TAKEAWAYS

MBA degrees are correlated with stronger growth, but only in companies between $100 M and $1 B. Moreover, the strongest growth of any of the smaller companies was by a non-MBA CEO. An MBA is a useful early indicator of business savvy – and perhaps drive, but as executives build their experience, results should be a larger factor in selecting candidates than whether they have an MBA or not.

Some search committee members favor CEO candidates with strong business backgrounds, which often blind them to excellent candidates with valuable technical backgrounds. Our experience is that technical degrees often correlate with high intelligence levels and also that CEO comfort with technical details helps address strategic issues such as where the market is headed and where the best opportunities are to be found.

An Ivy League degree is an asset to performance. Perhaps the admissions process in these programs is a great filter for work ethic and smarts. Search committees tend to be biased either for or against Ivy League degrees. This data shows that an Ivy League degree is positively correlated to performance.

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Dora Vell

Dora Vell is the Managing Partner of Vell Executive Search, a boutique executive search firm in Boston focused on recruiting technology executives and board members. Vell has successfully completed numerous board member and C-level executive searches, including CEOs, COOs, CIOs, and Vice Presidents - at both public and private companies.

Prior to founding the firm in 2005, Vell was a Partner at Heidrick & Struggles' Technology practice for seven years.  Before her career in executive search, she worked at IBM for 11 years, managing software engineering organizations of 100 people and software sales organizations with revenues of $150 million. She has also served as an executive assistant to the CEO of IBM Canada for one year.

Vell holds seven worldwide software patents. She has published several Business of Leadership reports on governance and leadership and has been quoted in numerous articles including The Wall Street Journal, Forbes, Business Week, Fortune, Agenda Week, MSNBC, Mass High Tech, the OPUS for the World Economic Forum, Boston Business Journal, The Globe & Mail, CIO Magazine, and IEEE. She also has been a featured speaker on leadership at numerous conferences and at Columbia University's MBA program.

Vell is a member of the National Association of Corporate Directors (NACD), the Boston CEO Roundtable. She has served on the boards of Framingham State, Entrepreneur's Organization, Goodwill, Mary Centre for developmentally handicapped adults, garage.ca, and RBC Capital Partners.

She has received an MBA from the University of Toronto, a Master in Computer Science from the University of Waterloo, and a Bachelor in Computer Science from Carleton. She has also completed the MIT Entrepreneurial Master’s program.

www.vell.com/

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