Corporate CEOs are headline news. Stock prices rise and fall at word of their hiring and firing. Business media debate their merits and defects as if individual leaders determined the health of the economy. Yet we know surprisingly little about how CEOs are selected and dismissed or about their true power. This is the first book to take us into the often secretive world of the CEO selection process. Rakesh Khurana's findings are surprising and disturbing. In recent years, he shows, corporations have increasingly sought CEOs who are above all else charismatic, whose fame and force of personality impress analysts and the business media, but whose experience and abilities are not necessarily right for companies' specific needs. The labor market for CEOs, Khurana concludes, is far less rational than we might think.

Khurana's findings are based on a study of the hiring and firing of CEOs at over 850 of America's largest companies and on extensive interviews with CEOs, corporate board members, and consultants at executive search firms. Written with exceptional clarity and verve, the book explains the basic mechanics of the selection process and how hiring priorities have changed with the rise of shareholder activism. Khurana argues that the market for CEOs, which we often assume runs on cool calculation and the impersonal forces of supply and demand, is culturally determined and too frequently inefficient. Its emphasis on charisma artificially limits the number of candidates considered, giving them extraordinary leverage to demand high salaries and power. It also raises expectations and increases the chance that a CEO will be fired for failing to meet shareholders' hopes. The result is corporate instability and too little attention to long-term strategy.

The book is a major contribution to our understanding of corporate culture and the nature of markets and leadership in general.

"Rakesh Khurana's brilliant, path-breaking book offers a thought-provoking perspective on the cult of heroic leadership in America. His fascinating insider insights into the decision-making process in corporate boardrooms are intriguing, illuminating, and, at times, appalling. This book would be worth reading for the scope of his research and the breadth of his analysis alone. But he also issues a powerful call for change that should shape the debate about CEO choice and company performance for years to come."--Rosabeth Moss Kanter, Harvard Business School, best-selling author of "Evolve!: Succeeding in the Digital Culture of Tomorrow" and "When Giants Learn to Dance"<P>"This book deals squarely with one of the greatest issues of our time: whether our business leadership is selected in the right way, whether we are getting the right people who are motivated in the right way to promote long-run success. This is a very important book for what it says about the direction of our economy."--Robert J. Shiller, Yale Univeristy, author of "Irrational Exuberance"<P>"This is really--and I mean really--a nice book. Khurana explains why the boards of major U.S. corporations actively turn to outsiders and situates this shift in broader trends in management. Providing insight into a broader social transformation while providing an explanation of a specific phenomenon, this book should appeal to a wide audience."--Joel Podolny, Stanford University

Rakesh Khurana is Assistant Professor of Organizational Behavior at the Harvard Business School.

Preface ix

1. "Everyone Knew He Was Brilliant ":The Wooing of Jamie Dimon 1

2. A Different Kind of Market 20

3. The Rise of the Charismatic CEO 53

4. Board Games:The Role of Directors in CEO Search 81

5. The Go-Betweens:The Role of the Executive Search Firm 118

6. Crowning Napoleon:The Making of the Charismatic Candidate 151

7. Open Positions,Closed Shops:Learning from the External CEO Succession Process 186

Appendix 221

Notes 237

References 273

Index 289