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Very little sophisticated research exists on the size, quality, and efficiency of the labor market for CEO talent. Our paper attempts to shed light on the CEO labor market by considering the perspectives of the directors who are directly responsible for hiring and firing the CEOs of the largest publicly traded corporations in the U.S. We find that directors overwhelmingly believe that the CEO job is exceptionally challenging and only a handful of executives are qualified to run their company and others in their industry. This suggests that the labor market for outstanding CEO talent is significantly tighter and more competitive than governance experts might realize, with important implications for compensation, succession planning, and other governance issues.

Two decades ago, McKinsey advanced the idea that large U.S. companies are engaged in a “war for talent” and that to remain competitive they need to make a strategic effort to attract, retain, and develop the highest-performing executives. To understand the contribution of the human resources department to company strategy, we surveyed 85 CEOs and chief human resources officers at Fortune 1000 companies. In this Closer Look, we examine what these senior executives say about the contribution of HR to the strategic efforts and financial performance of their companies. We ask: • What role does HR play in the development of corporate strategy? • Does HR have an equal voice or is it junior to other members of the senior management team? • Do boards see HR and human capital as critical to corporate performance? • How do boards ascertain whether management has the right HR strategy? • How adept are companies at using data from HR systems to learn what programs work and why?

Shareholders pay considerable attention to the choice of executive selected as the new CEO whenever a change in leadership takes place. However, without an inside look at the leading candidates to assume the CEO role, it is difficult for shareholders to tell whether the board has made the correct choice. In this Closer Look, we examine CEO succession events among the largest 100 companies over a ten-year period to determine what happens to the executives who were not selected (i.e., the “succession losers”) and how they perform relative to those who were selected (the “succession winners”).We ask: Are the executives selected for the CEO role really better than those passed over? What are the implications for understanding the labor market for executive talent? Are differences in performance due to operating conditions or quality of available talent? Are boards better at identifying CEO talent than other research generally suggests?The Stanford Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books “Corporate Governance Matters” and “A Real Look at Real World Corporate Governance.”