Better performance

Higher returns to shareholders

Much ink has been spilled on what makes a great CEO. Even more on what makes a great leader. When it comes to CEOs, however, above market returns to shareholders provide the yardstick that matters, and therefore, we must be judged by the performance of our clients. It is about process, but importantly, it is about results.

The CEOs whom we have helped the boards select have produced an average CAGR in their shares of 8.8 percent during their tenures, compared with 3.8 percent for the S&P 500.

That compares with private equity. In an analysis of 163 U.S. public pensions, reported in the Financial Times, the median return for the past 10 years from private equity was 8.6 per cent a year.

Celectiv defines a company’s culture by how it creates value

Cultures can best be described by how companies come to market, and thereby, by how they seek to create value. There is no wrong or right culture when defined this way. When adjusted for the economics and risks of industries, no culture has a monopoly on value creation. 

Cultures are merely different, and they value behaviors differently. Behaviors, particularly the behaviors that companies reward, define cultures. Some companies, like 3M, value external awareness and big ideas; others, like Toyota, value best practices and operational excellence. 

Some behaviors often used to describe culture do not differentiate between cultures, however, no matter how accurate they may seem. For example, all companies should value analytical prowess and integrity. Likewise, representing a company’s culture as “paternalistic” may describe how management treats employees, but it says little about how the company creates value. 

Celectiv has identified eight behaviors that do differentiate corporate cultures.

Our cultural model has roots in more than 2,000 behavior-based interviews at more than 100 companies around the world; the results of these interviews appeared in a 2005 article in Harvard Business Review called “Culture Matters Most.”  Cultures are powerful gyroscopes. Executives within the same company are 1.8 times more likely to exhibit similar behaviors with each other than with people who do the same job in a different company. For example, a vice president of operations at Honda has more behavioral similarities with other vice presidents at Honda than they do with operations executives at other companies.

Since publishing the article, we have done several thousand more behavior-based interviews, and we have collaborated with cultural anthropologists and sociologists at The University of Chicago and Northwestern to refine and validate our model. 

A variety of sources estimate that 40 percent to 50 percent of all recruits fail within 18 months and attribute most of the failures to poor cultural fit. In other words, it is pretty much the flip of a coin. Our validation studies show that Celectiv can predict culture accurately 70 percent of the time. 

Cultural mapping allows management to align talent truly with culture, decision-style and strategy.

Competitive analysis

Andrea Sanders is a doctoral candidate in psychology at DePaul University in Chicago. She was a paid intern at Celectiv in 2017 and wrote two papers on assessment tools.

Resume biodata & problem solving skills

Prescreening assessments

Sophie Peck is a doctoral candidate in cultural anthropology at The University of Chicago.  She was a paid intern at Celectiv in 2017 and wrote the following analysis of corporate culture and competitive products.

Workplace culture