In 1980, male military veterans were in charge of almost 60 percent of large public companies in the United States. By 2006, a mere 6.2 percent of these businesses had CEOs with military experience. These numbers, from a January National Bureau of Economic Research working paper by Efraim Benmelech and Carola Frydman, aren’t necessarily surprising. As the duo explained to me over email, “the decline in military CEOs is a reflection of broader trends in the U.S. population.” Indeed, the number of U.S. military personnel has declined dramatically from
the 12 million at the end of World War II. Using Forbes 800 and
Execucomp surveys that identify company CEOs, and aided by additional research into military service, age and education,
Benmelech and Frydman were able to compare firms run by veterans with those run by executives without any military experience. Then they asked a question: “Has the disappearance of executives who served in the military from the C-suite had a real impact on corporate America?” The answer is yes. “Military CEOs seem to cope better under pressure, which is important for
firms that experience distress, or for firms that operate in industries that are in distress,” the authors told me. “This seems to stem from military training and experience in difficult situations.” In addition, “military CEOs are also more conservative in making investments and are much less likely to be involved in financial fraud.” Furthermore, the researchers found that while some military CEOs held MBAs, this fact didn’t have much to do with the tendency of these executives to avoid fraud or act
conservatively about investments. To be clear, not all non veteran
CEOs behave differently from their military counterparts. But given these newly identified characteristics of military CEOs and their significant drop-off since 1980, it’s worth pausing to consider what current and future business leaders might be
missing out on and how to fill that gap. “We need to better define
what aspects of leadership are unique to veteran CEOs, and then we need to think about how to incorporate those into business education,” say Benmelech and Frydman. “In general, it seems like
a good idea to highlight ethics and leadership even more.”
