WASHINGTON (CBS DC) — A new study finds that company CEOs have poor people management and have difficulty engaging their board and co-workers in even the most basic ways.

The study was conducted as a joint project between Stanford University’s Center for Leadership Development and Research, graduate business school, Rock Center for Corporate Governance and the Miles consulting group in New York. The study showed that chief executive officers and their boards are far too focused on their company’s financial bottom line, and not on the people.

The survey asked company boards and CEOs about the weighting they give to various aspects of CEO performance. The most important thing, rated at 41 percent, was “accounting, operating or stock price performance.”

The premium given to personnel’s performance was incredibly low, with “succession planning” getting just a 5 percent rating and “workplace safety” receiving just 2 percent.

When boards were asked about their respective CEOs’ greatest strengths, 70 percent rated “decision-making skills” at the top. At the bottom, 27 percent said “compassion/empathy,” 23 percent said “mentoring skills/developing internal talent” and only 23 percent reported “listening skills.”

The vast majority of directors (83 percent) and boards (64 percent) agreed that the CEO evaluation process should rely on a balanced approach between financial performance and non-financial measurements.

“Unfortunately, the truth of the matter is that the CEO evaluation process is not that balanced,” said Stanford’s David Larcker, co-director of the Center for Leadership Development in a statement to Forbes. “Amid growing calls for integrating reporting and corporate social responsibility, companies are still behind the times when it comes to developing reliable and valid measures of non-financial performance metrics.”

Other results from the study found that only 41 percent of directors say their CEO is in the top 20 percent of their peers and 17 percent reported that their CEO is below the 60th percentile ranking. Also, a significant minority (10 percent), say they have never evaluated their CEO.


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