The Good CEO: Endangered but Not Extinct

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In the 2001 book "The Future of Leadership," a chapter by USC Professor James O'Toole extols a brand of executive who continuously reinvent their companies. A paradigm of such leadership, O'Toole wrote: Enron's Ken Lay.

Many of yesterday's magazine-cover CEOs now grace Most Wanted posters. Of the 92 CEOs on the cover of Business Week from 1997 to 2001, 49 are gone, according to the National Post in Canada. Cast out alongside them was the old definition of the future of leadership.

"To be called a 'Celebrity CEO' is not a good thing anymore," says management consultant Douglas Smith. "It may well mean you've got manacles on your wrists."

A question is being revisited: What is a good CEO? Despite the falls from grace of many corporate sacred cows, executive-watchers say investors still can answer this question -- and find many worthy examples.

What Lies Beneath

Emmett Murphy, chairman of the Murphy Leadership Institute who has studied 30,000 senior executives for the past 20 years, notes some statistical factors. "Better managers tend to be 4 1/2 years older than less-effective ones; they also have significantly higher tenure than other managers," Murphy said. "But to get a real understanding, you have to look deeper."

The best ways to assess a CEO arise from his character, experience and performance. These 10 Measures of a Good CEO will enable investors to distinguish between the good, the bad and the truly awful.

1. The Ability to Generate Trust

According to Murphy, successful leaders share certain characteristics, among them: commitment to achievement and meritocracy inside the company; a no-preconceived-notions approach to the company's future; a service ethic; optimism; and a commitment to working through problems. These notions are essential in building trust among employees, customers and investors.

Murphy says John Chambers, despite the well-documented troubles at Cisco, embodies these characteristics. "Chambers is not running away, he is not contemptuous of his people or his shareholders. He will emerge as a hero in all this."