US News reports on an academic study of the correlation between CEO charisma and corporate financial performance. Does charisma matter? The survey says … apparently not!

"In what is considered the most extensive analysis of its kind, the authors surveyed the top management teams at 128 companies averaging $6.5 billion in assets and 16,000 employees. They asked 770 high-level managers to rate their CEOs on five elements of charisma—dynamic leadership, exemplary leadership, concern and respect for others, high expectations, and willingness to take personal risks. Then the authors compared their findings with the companies’ actual financial results—stock returns, returns on assets, returns on sales, returns on equity, and sales growth—before and after the arrival of the CEO. The results were not what they expected.

"’If you look at it over the long term,’ says Agle, ‘there is no correlation.’ Charismatic leaders, in other words, have no effect on subsequent financial performance."

If charisma doesn’t matter, what does?

"The lesson here, for investors—and for would-be CEOs—is a positive one, in some ways. Animal magnetism, it turns out, isn’t everything. ‘Charisma is not necessarily the thing that’s going to bring your organization to the top,’ says Agle. ‘Experience and competence and regular leadership skills are sufficient.’ Memo to all of those boards of directors praying for the next Jack Welch: Even if he comes, he may not be able to build anything."

On the other hand, Jack’s charisma may be based on his success at G.E., success based on experience, competence and amazing leadership skills…