What really makes a good CEO?

I must admit I was intrigued to come across the Financial Times’ new CEO Performance Ranking this week. The FT’s interactive tool allows you to give different weighting to different aspects of their organisations’ performance to create a new ranking based on what you think is most important. It is well implemented and makes for an engaging exercise – the team behind it deserves credit for trying to make a difficult question more tangible: what makes a great CEO?

In my work, I have the privilege of speaking regularly with the CEOs of many of the UK’s largest businesses about their ambitions for the organisations they lead and what keeps them up at night. Indeed, fourteen of the top-ranked CEOs lead Institute member organisations, with a further three heading groups which contain member organisations.

The real value of the ranking is that it sparks debate. But it also points to a more fundamental issue: what really determines whether a business succeeds over the long term, and which aspects of leadership carry the greatest weight in that judgement?

How we measure success has a big bearing on the lives we lead and the world we collectively create. Investors, employees, the supply chain/partners and customers all have legitimate expectations of CEOs. Investors rightly expect a return on their investment. Employees want confidence in the organisation’s leadership and direction. Customers expect consistent value, fair treatment and a great overall experience and the supply chain wants consistency and commitment.

A good CEO, therefore, cannot be judged by a single outcome, a single stakeholder group or a single year. The stronger test is whether they can consistently balance these interests while building an organisation that is more resilient over time. The long-term view is interesting because when we look at tenure, again, we tend to see high-performing organisations have CEO’s that stay the distance.

So, if we are asking what makes an outstanding CEO, there are two areas I would be tempted to move the sliders further: long-term value creation and the underlying drivers of performance.

Be determined in your long-term view

As the Financial Times itself acknowledges, comparing chief executives is far from straightforward. For that reason, I would place much greater emphasis on the tenure return, (defined in the FT’s exercise as total shareholder return relative to the FTSE 100 over the CEO’s tenure), rather than on the one-year return.

The reason is simple: effective leadership usually reveals itself over time. As Jeff Bezos famously stated at Amazon’s annual shareholder meeting in 2011, “We are stubborn on vision. We are flexible on details.”

That phrase captures an important point: successful leaders need to be clear and determined about an organisation’s purpose and long-term direction, while remaining agile and fluid about how they get there to ensure they remain relevant in how they execute.

A single year can provide a good indication, but it can also reflect market cycles, external shocks or short-term decisions that say little about the quality of leadership itself. Looking across a CEO’s full term gives a better sense of what has changed under their stewardship, whether their strategy has held up, and the extent to which they have created durable value and better outcomes for all stakeholders.

That longer-term view also matters to investors, employees and customers, who have a shared stake in the organisation performing consistently, adapting when required and growing sustainably.

Look under the hood – think about what underpins overall performance

Standout leaders are adept at balancing the interests of different stakeholders. Performance should be judged not only by the numbers but by how well a CEO creates the conditions that make those numbers sustainable. Access to capital and investor confidence are, of course, key. But so too are the trust employees have in their leadership and the loyalty of customers.

That is why the FT’s inclusion of employee satisfaction is welcome. Staff matter because they help determine whether the strategy translates into performance. Employees shape productivity, culture and reputation, particularly on the front lines, where day-to-day conduct can reinforce customer confidence and support long-term value creation.

The same logic applies to customer and client relationships, on which any business model ultimately depends.

To that end, retention, trust and service quality all impact an organisation’s ability to continue delivering value, both now and in the future. In that sense, the best CEOs are not simply those who deliver strong numbers in isolation. They are the leaders who understand what sits behind those numbers, align stakeholders around a long-term vision, measure what matters, deliver service-led cultures, remain externally focused and execute well under pressure, remaining flexible to adjust course when circumstances change.