CEO’s of big corporations only have IQ of 115 on average
Thanks to Steve Hsu for reporting that Swedish CEO’s are only 1 SD smarter than average. That’s about an average IQ of 115. Smart, but not exceptionally smart.
It also helps to be tall. CEOs are 0.5 SD above average in height, and looking at the distribution, if you are in the bottom 25% in height you are pretty much screwed out of becoming the CEO of a big company.
But most important for being CEO is “psychological fitness for the military” in which CEOs are 1.5 SD above average.
Psychologists use test results and family characteristics in combination with one-on-one semi-structured interviews to assess conscripts’ psychological fitness for the military. Psychologists evaluate each conscript’s social maturity, intensity, psychological energy, and emotional stability and assign a final aptitude score following the stanine scale. Conscripts obtain a higher score in the interview when they demonstrate that they have the willingness to assume responsibility, are independent, have an outgoing character, demonstrate persistence and emotional stability, and display initiative. Importantly, a strong desire for doing military service is not considered a positive attribute for military aptitude (and may even lead to a negative assessment), which means that the aptitude score can be considered a more general measure of non-cognitive ability (Lindqvist and Vestman, 2011).
So the psychological characteristics described above are more important for becoming CEO than being smart.
DISCUSSION
These findings are consistent with my previous speculation that most career tracks have cognitive floors, and once you are above the cognitive floor, having additional higher IQ isn’t of much use. The cognitive floor for management positions in corporations seems to be around 110 or so. After that, getting promoted requires personality traits that are correlated with “fitness for the military” rather than higher IQ.
The problem here is that while an IQ of 110 to 115 is high enough to get promoted through the corporate ranks, it’s not smart enough to make smart decisions about the direction of the business. This explains why most corporations are so poorly run and continually make costly business mistakes.
Lion of the Blogosphere 
A number of observations have lead me to believe that an IQ of 115 is about what is necessary to understand important mathematical concepts such as fractions, proportions, percentages, and absolute vs relative quantities and changes.
You learn those things by the 7th grade, and I really don’t see much reason to educate most people past that level.
CamelCaseRob
October 12, 2014 at 8:36 AM
I think you only need an IQ of 90 to grasp those concepts..and maybe even algebra 2 and calculus. Math is just rules. Verbal, on the other hand, is much harder and a person with an IQ of less than 115 will never excel at it
grey enlightenment
October 12, 2014 at 9:17 AM
There’s a difference between memorizing the rules for taking a test, and actually understanding fractions when you are interpreting business metrics.
Lion of the Blogosphere
October 12, 2014 at 9:28 AM
Lion – Who care’s about high IQ needed to run a company? Most CEOs work for corporations of which they didn’t found. Having a talent for value transference is expected of all $$$ 500 CEOs.
JS
October 12, 2014 at 10:17 AM
Math is ‘just rules’, but being good at applying those rules requires a number of cognitive abilities that aren’t always present at even the average IQ. Successful math ability requires zero deviation from rule application. Therefore, flawless attention to detail is mandatory. This is likely what separates most people in math, assuming that memory is sufficient. The second factor is either having an effective math teacher (rare) or having both the motivation and ability to teach yourself the rules at every stage. The latter requires an effective textbook. The learning/teaching factors usually requires at least one element that is generally beyond the student’s control, but that can be compensated for with engaged parents who perhaps purchase extra learning materials for the student.
It wasn’t until I re-taught myself all of high school math in one week as an adult, using a cram guide, that I realized just how crucial and terrible most math teachers are. It really isn’t difficult, and a high school kid with slightly above average IQ could learn it in a week of self-study. Instead, that week is dragged out over four years of most often mediocre-to-bad teaching.
Verbal reasoning, on the other hand, can only be improved with years of practice and cognitive development gained from reading and writing. When you have it, it’s like breathing and you can’t often explain why you do or know something, but it instead fits together intuitively. I can write to a respectable graduate level, but I can’t necessarily teach even basic ESL well.
Frank
October 14, 2014 at 4:20 AM
By main point being that someone with an IQ of 115 has the conceptual abilities needed to be an effective CEO.
CamelCaseRob
October 12, 2014 at 9:47 AM
Hsu (and Lion) is deluding himself to think 115 is standard for CEOs.
Going by anecdotal observations I’d guesstimate CEO level IQ is 120-130.
A better method to figure out CEO IQ than this Swedish study would be to look at which colleges Fortune 500 CEOs graduated from, estimate the student body’s mean IQ from SAT scores and assign them to each executive, and finally average out the SAT derived IQs for all CEOs.
The Undiscovered Jew
October 12, 2014 at 10:22 AM
You’d be surprised how many CEOs graduated from Frat State University.
Concordia_Pete
October 12, 2014 at 7:33 PM
“This explains why most corporations are so poorly run and continually make costly business mistakes.
If the CEO is making a ton of money, then the company isn’t poorly run, from the CEO’s point of view.
peterike2
October 12, 2014 at 10:27 AM
In my experience, being a good manager or CEO to a great extent hinges on personality, such as being extroverted, conscientious, patient, energetic, decisive, reasonably conservative, etc. You need to be fine with enthusiastically repeating basically the same chores year after year, and you must be able to see when you need to do things differently. Otherwise, you’re liable to burn out (or flame out, like some of the hothouse MBA CEOs that from time to time turn up on the international stage). Add to that experience and in most businesses, you’ll do fine at IQ 115-120.
Glengarry
October 12, 2014 at 10:56 AM
As I watch the different career trajectories of my old college classmates (at a top 20 non-ivy school), I see a pretty strong correlation between their success and the amount that they partied as undergrads. Admission into a good school shows the requisite iq and work ethic…partying shows extroversion and overall intensity of personality, which differentiate people who are all smart enough to be executives.
SJ
October 12, 2014 at 11:03 AM
I’ve always suspected that if in the average company you replaced the CEO with a randomly chosen full-time worker, the observed difference in company performance would not be great.
chairman
October 12, 2014 at 11:09 AM
The interesting question is in what percent of cases would observed company performance IMPROVE? I suspect above 25% of cases.
chairman
October 12, 2014 at 11:10 AM
As for being tall and scoring high on the “military fitness” metric, people are naturally programmed to follow the leadership of a tall, socially dominant alpha male. It’s a vestige of our paleolithic tribal past.
McFly
October 12, 2014 at 11:29 AM
Most American corporate value transference departments are shoddy because of their large contingent of female workers who take in more than what their output is. I blame the CEOs.
The socially dominant Alpha Male in charge is a non-issue in most companies. Guys want to work and get their fair share of rewards and could care less of the CEO as a result. Only in America, where there’s huff puff and smoke about our leaders needing to be Alpha and often they don’t live up to the hype.
JS
October 12, 2014 at 2:30 PM
Tall alpha males? Like Bloomberg? Or, zuckerberg? How about Bill Gates? Revenge of the Nerds was not a movie about Alpha Males!
Joshua Sinistar
October 12, 2014 at 6:11 PM
Just from the point of probability and statistics, it is obvious that IQ is not the most important requirement to become a CEO of not a technical company.
MyTwoCents
October 13, 2014 at 1:43 AM
“So the psychological characteristics described above are more important for becoming CEO than being smart”
Other psychological characteristics besides “intelligence” are a big part of any kind real-world achievement. This “fitness for the military” metric is way more useful than IQ.
McFly
October 12, 2014 at 11:46 AM
Journalists have misunderstood this study somewhat. 115 is the average for all CEOs. CEOs of large Swedish companies have an average IQ of around 130, around the mean of MIT or Caltech students. Thats pretty high for an average.
http://www.ifn.se/eng/publications/wp/2014/1024
Look at table 1.
Victarion
October 12, 2014 at 12:03 PM
Jeez, I hope most MIT and Caltech grads have IQs higher than 130. That’s a 1 out of 50 IQ.
CamelCaseRob
October 12, 2014 at 1:03 PM
Based on SAT-scores, the *average* IQ at Harvard is around 130.
http://iq-brain.com/blog/average-harvard-iq/
An average IQ of 130 for an institution with thousands of people should not be thought of as one person having an IQ of 130. Half of them have above 130, many of them way, way above. The same is apparently true for CEOs of large Swedish firms.
Victarion
October 12, 2014 at 4:47 PM
I gotta think most Caltech and MIT grads are over 135. A study found the average Harvard iq at 127, but Harvard admits legacy and athletes who dilute the IQ average. MIT and Caltech don’t really do this.
Jack
October 12, 2014 at 6:31 PM
Harvard doesn’t select for IQ. That’s the whole point of holistic admissions, isn’t it?
Glengarry
October 13, 2014 at 12:13 PM
I guess it depends on industry and the company. Running a company that makes biscuits would be different than one that produces planes. Herman Cain was a former CEO for a pizza company. How would a NAM CEO such as him fare under Boeing or Lockhead Martin?
JS
October 12, 2014 at 2:52 PM
Uh, Boeing and Lockheed get most of their money from the government, no? CEO only really has to worry about hiring and then effectively managing the leadership of lobbying and proposal departments. Then it’s easy, the checks just roll in. Being CEO of a pizza chain that has to compete viciously with similar pizza chains is probably harder if anything
Anonymous
October 13, 2014 at 11:44 AM
I don’t know. That’s why I asked.
JS
October 13, 2014 at 7:52 PM
Lion, the point you made in your last paragraph is a very good one. This is why corporations should be run more like academia: search committees, empowerment, 180 degree evaluations, ect. The person at the top doesn’t know everything.
BehindTheLines
October 12, 2014 at 12:38 PM
[…] wildly popular Lion of the Blogoshere is the latest blogger I’ve seen commenting about a study showing that Swedish elite CEOs have a mean IQ of 115. He […]
Lion of the Blogosphere discusses the IQ’s of CEOs | Pumpkin Person
October 12, 2014 at 1:10 PM
I’ve read a few reputable articles here and there that claim that all CEOs have some sociopathic traits; in fact, those traits are what, in part, propel them into the CEO suite.
E. Rekshun
October 12, 2014 at 1:50 PM
Depends on the industry. A lot of CEOs in medium sized manufacturing or retail businesses tend to be fairly normal, hard working guys. My impression is that are just more serious and have a better work ethic than the average individual. They made the right connections and landed decent jobs. CEOs of tech companies or financial service firms on the other hand seem more sociopathic.
Peter Akuleyev
October 13, 2014 at 5:54 AM
Is this guy smart? He at least is trying to be unPC, but realistic, when it comes to women and technology wages.
http://www.huffingtonpost.ca/2014/10/10/satya-nadella-womens-pay_n_5964504.html?utm_hp_ref=mostpopular&ir=Canada+Business
I loved his take that Karma will determine your fate and your SALARY.
JS
October 12, 2014 at 2:18 PM
Well actually, the last thing a CEO wants is all of the little people in the corporation asking for raises, because that would mean less money to pay the massive salary of the CEO.
Lion of the Blogosphere
October 12, 2014 at 2:44 PM
http://content.time.com/time/nation/article/0,8599,1227055,00.html
Where the Fortune 50 went to college…nothing special for the most part. Anybody with an IQ over 130 isn’t going to be interested in being a BS artist. These people become professors, quants, etc.,
Kant
October 12, 2014 at 5:01 PM
Actually you don’t need a lot of brains to be a CEO. All you need is a friend who is a Vampire Squid on Wall Street or a Central Bank that specializes in Counterfeiting. With enough blood money, you can buy a successful business built by an Angry White Male, lay off all the workers, drive it into bankruptcy, and still give yourself a huge salary…
BTW, did you hear China has the largest economy in the world now?
Joshua Sinistar
October 12, 2014 at 6:14 PM
Anytime CEOs at large companies have to actually make a tough decision, they will spend big on consultants to hold their hand and give them options in a comforting, easy multiple-choice format with the “right answer” practically spelled out for them.
ATC
October 12, 2014 at 9:50 PM
It’s about CEOs, not entrepreneurs.
Succeeding in business means many things besides IQ. There’s the tendency among HBD’ers to think everyone cares about IQ. They don’t. (They should, but they don’t.) People are simply more swayed by optimistic, extraverted/talkative men; these people are deemed more appealing.
Maciano
October 13, 2014 at 5:12 AM
True to an extent. Until analytical thinking and speaking are required. When you are required to know something, it helps to know it or to be able to speak intelligently about what you want to know in the future. The point is that extroverted overconfidence without the analytical ability will inevitably lead to ignorant commentary, which short circuits career progression if you aren’t yet on-top. However, you’ll see the type that you are speaking about in greater numbers below the CEO in VP, Director, Senior VP or other such positions. This is because they are there so that the CEO can gain the benefits of their charisma, but they wouldn’t necessarily get screened to a significant CEO position themselves unless they had an inordinate amount of juice. CEO’s of better companies tend to be at least a little better balanced. This is all my observational experience within the higher ranks of actual large companies.
Frank
October 14, 2014 at 4:35 AM
It would be interesting to see a breakdown of CEO IQ by industry. Being CEO of a business in a new high growth industry does requires intelligence, being the caretaker of a giant established corporation like Coca Cola, Gilette or even GE requires charisma, work ethic, presentation skills and the ability to delegate – as Lion says military skills. In my experience in the business world the highest IQ people in the company are usually the CFOs and they generally lack the leadership skills to ever take charge. I have met some shockingly stupid CEOs, maybe not surprisingly in companies that subsequently filed bankruptcy. The smartest CEO I have met in person is probably Dov Charney, the (former) CEO of American Apparel – that is a guy with an IQ probably well in excess of 115, but probably also sociopathic. He was also too unstable and too ADHD to run American Apparel once it had become a fairly mature business.
Peter Akuleyev
October 13, 2014 at 5:51 AM
You want to see ADHD? This CEO can’t finish a sentence.
bjdubbs
October 13, 2014 at 7:36 AM
This IQ study highlights, btw, why MBAs are a racket. The basic concepts of business are just not that complicated for anyone with an IQ over 115. You don’t need to learn business in school.
Peter Akuleyev
October 13, 2014 at 5:58 AM
This explains why most corporations are so poorly run and continually make costly business mistakes.
This statement explains why LotB wants Obama, Holder, and Jarrett to have more control over “monopoly” corporations. He thinks that gov runs things better than these stupid CEOs he’s so painfully jealous of. (This is the case even though LotB has admitted that he doesn’t even have the energy to start a business of his own.)
Heard of the 20th Century LotB? That’s when the whole world ran an experiment to see whether gov control was better than free-enterprise and your people lost BADLY! Big. Time. Losers.
runindogs
October 13, 2014 at 10:10 AM
Social Security, free college tuition, a healthy middle class…all brought to us with a high tax rate on the rich. What an awful time!
Kant
October 13, 2014 at 8:40 PM
Once a corporation reaches a certain size where it can leverage it’s assets to eat up competition rather than actually compete I’d imagine the need for smart people making smart decisions goes way down, all you need are ruthless people on top and an army of drones to keep the lights one while value extraction continues.
Sisyphean
October 13, 2014 at 10:31 AM
Something to bear in mind is that when it comes to managing people, personality and psychological qualities become a major issue. Not everyone with an IQ of 115 could run a company. For that matter, not everyone with an IQ of 160 could, either. But I’m still surprised the CEO average would be 115. I would think that a minimum with an average would be closer to 125. Regardless, I’m feeling vindicated about my claim on your “military is prole” post that anyone with the capability to be a colonel or general has the capability to be a CEO in the private sector.
I’ve always used the “ditch digger” analogy to explain the role of IQ in performing certain jobs. It takes a certain amount of intelligence to dig a ditch. Perhaps an IQ of 60 is sufficient. Someone with an IQ of 80 might be able to dig a better ditch than someone with 60. But can someone with 100 dig a better ditch than someone with 80? Probably not. After you reach the minimum required there are diminishing returns and other factors like determination become more important. At some point extra intelligence might even be a detriment.
As for why CEO’s might have such low IQ’s (if in fact they do) I recently explained this in a discussion on another blog concerning why Nobel prize winning physicists are more likely to have an IQ of 140 than 160. The minimum IQ to really master the math and physics might be 120. Let’s say that performance continues to improve up to 150. While a disproportionate number of 150’s and 160’s might win Nobel prizes there are so many more 130’s and 140’s who could potentially have an insight that the gravity of their numbers would pull the average back down.
destructure
October 13, 2014 at 11:13 AM
Actually it really doesn’t matter who the CEO is if you’re a Capitalist. Its all about the money. Unfortunately, people are beginning to discover that this model leads to unemployment and bankruptcy. When a company gets taken over, the new owners can usually make more money by laying off workers, outsourcing jobs and selling off assets for a quick buck. This usually destroys the business in which the product or service becomes worthless and key assets that the company needed to supply like logistics and support fall into ruin. The Hostile Takeover Group makes a fortune, but those jobs die and the entire life’s work of an entrepreneur gets thrown onto the trashheap of history for no reason but short term profit. Where does this lead? A country without a tax base or a consumer base will be a failed state!
Joshua Sinistar
October 13, 2014 at 4:19 PM
The corporate model in America is a sociopathic/parasitic one. It’s all about profit based value transference which benefits only the CEO and the wealthy shareholders at the expense of the workers who are the host/backbone of the company.
But no one is complaining or doing anything about it because most people believe that the govt will provide welfare upon destitution.
JS
October 16, 2014 at 12:30 PM
Explains why there are so few women CEOs.
Koozsa
October 13, 2014 at 7:21 PM
I repeat: the study finds that CEOs of large Swedish firms have an IQ of around 130, not 115 as the journalist claims. A little more than 2 s.d above the mean. Look at table 1.
http://www.ifn.se/eng/publications/wp/2014/1024
This study strongly confirms IQ-theory, those on the top are smart as well as having other qualities. I guess people strongly desire to believe CEOs of large firms are mediocre so they ignore the actual finding and keep repeating the 115 number, which refers to small firms.
Victarion
October 16, 2014 at 11:04 AM