U.S. companies led by chief executives with military experience have outperformed the U.S. stock market’s main benchmark index over the past three, five and 10-year periods, according to a survey released Friday.
The study by recruitment firm Korn/Ferry International found 59, or 8.4 percent, of the CEOs running the 500 companies in the Standard & Poor’s 500 Index had served as military officers, and these companies on average outperformed the index by up to 20 percentage points.
CEOs with military experience also tended to last longer in the job, staying an average 7.2 years while CEOs without military experience remained an average 4.6 years.
“A military background gives you a more pragmatic and practical approach to the job,” said Joe Griesedieck, vice chairman of Korn/Ferry International. “We are not saying the correlation is absolute, as there are other factors to be taken into account. But this is interesting, as it could be to do with the type of leadership.”
The survey found the companies headed by former military CEOs provided an average annual shareholder return of 21.3 percent over the three years ended September 2005, compared with 11 percent for the S&P 500 Index.
For the five-year period, the ex-military CEOs provided a 9.5 percent return, compared with a drop of 10.7 percent in the S&P 500 and for 10 years, a 12.2 percent return vs. a 9.4 percent return for the index.
The study, “Military Experience & CEOs: Is There a Link?,” found former military CEOs were concentrated in the consumer packaging and utilities sectors — and least represented in technology companies, many of which have younger management.
Four former military CEOs were interviewed for the survey — Clayton Jones of Rockwell Collins Inc., Michael Morris of American Electric Power Co., Michael Jordan of Electronic Data Systems Corp. and Steven Loranger of ITT Industries Inc.
They identified six relevant leadership traits:
- Learning to work as part of team
- Organization skills
- Communication skills
- Defining a goal and motivating others to follow it
- A sense of ethics
- The ability to stay calm under pressure
“One of the essences of being a CEO is risk management. Hardly anything you do is without risk, and the military makes you more comfortable in taking on risk,” Jones, a former fighter pilot, said in the study.
“While we don’t necessarily believe that one must obtain military experience to become a successful CEO later in life, it is evident that the leadership skills acquired during military training can absolutely enhance one’s chances for success in corporate life,” said Griesedieck.