Competent Looking CEOs Earn More, But Perform No Better

Regardless of whether you think CEOs are fairly compensated, you'd probably agree that they shouldn't be rewarded or penalized for their looks. But new research suggests that, when it comes to CEO compensation, the appearance of competence -- as assessed by study subjects viewing CEO photographs -- results in higher pay.

That wouldn't be so bad if the "appearance of competence," which was intentionally left undefined by the researchers conducting the study, also predicted company profitability. But there was no correlation. In one of several experiments by Duke University's Fuqua School of Business professors John Graham, Campbell Harvey, and Manju Puri, study participants viewed photos of anonymous CEOs and rated each on a scale of one to five in terms of competence. The professors hatched the idea for the CEO study a few years ago when they came across political science research in which study participants accurately identified the winner of a Congressional election simply by viewing his or her face for a few seconds.

"We assumed the results would be very different for CEOs because they are so carefully vetted," says Harvey. After all, the choice of a CEO is typically made by a handful of people who are much more familiar with the candidate's long-term track record than average voters are in a political election. Looks shouldn't matter as much. But they did.

Other experiments by the Duke professors were also enlightening. In one, study subjects were asked to rank CEOs as "baby-faced" or "mature" on a scale of one to five. The "baby faces" -- typically people with large round eyes, high eyebrows and small chins -- were seen as less competent and more likeable.

So if we're unhappy with the way our leaders perform, it may be in part because we're using the wrong criteria to select them. This study provides a strong incentive to counteract our prejudices with objective criteria that will help us more productively assess our leaders, colleagues, and direct reports.