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Ivy League Degrees Don't Predict CEO Performance

Wednesday, 22 Sep 2010 | 3:00 PM ET

How much does an Ivy League education guarantee your success as a CEO? It doesn't, according to new research from University of New Hampshire. Hard to believe?

Source: harvard.edu

Take a look at the findings: in a study of 2,600 CEO turnovers between 1992 and 2007, the researchers "found that CEO education does not play a large role in the decision by a firm to replace its current CEO - poorly-performing CEOs are replaced, regardless of their education."

The research team used six measures of CEO education to come up with the results: Whether or not they attended a top-20 undergraduate program, whether or not they have an MBA, law or master's degree, and whether or not the MBA or law degree is from a top-20 program.

Paradoxically, while the research reveals that education is not a factor when firing a CEO, it also emphasized that it remains a significant factor in selecting the replacement.

According to Management-Issues, "even after a CEO with an MBA degree gets fired for poor performance, the board still looks to replace him or her with a new CEO who also has an MBA."

And here's why: Selection criteria for the chief's job are few and mostly immeasurable, with the only measurable factor being how you led your company toward increased shareholder value. In this vacuum of quantifiable factors then, selection ends up depending on qualitative conditions like educational background, work experience and interpersonal skills. Even some of these can take months to identify, especially traits like leadership skills, strategic vision and interpersonal abilities.

This is where education comes in as an important identifier of capability and expertise. Besides, educational background can also help identify a candidate's strategic style and entrepreneurial bent.

For example, graduates from schools that have a significant focus on social responsibility and innovation will more often than not, favor a similar culture at work. Candidates from schools that focus on building and developing entrepreneurs will likely have an entrepreneurial bent of mind, and therefore, a better appetite for risk.

So, there you have it: While a degree from Harvard might not be enough to keep you in the CEO chair if the company is flailing, it can conversely help your candidacy for the next venture. Of course, in the case of former HPCEO Mark Hurd, having strong personal connections to the founder of another company (Oracle's Larry Ellison) also works.

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Aman Singh is an Editor with Vault and works with Fortune 500 companies on reporting their diversity recruitment strategies and initiatives.

Comments? Send them to executivecareers@cnbc.com
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