The study in the Journal of Management finds that CEOs of companies facing poor financial performance are more likely to seek advice from others, but they prefer to hear recommendations from internal advisers who are less likely to provide new perspective and more likely to confirm what the CEO already believes. And when they do ask for external advice, they tend to confide in “trusted, friendly contacts” or people with similar backgrounds.
The journal article, based on a review of 65 studies in top academic journals, thus concludes that CEOs should recruit advisers with a “diverse set of perspectives and ideas” because it may be too late to get such fresh advice if times get difficult.
The article in Harvard Business Review China entitled “Opportunities and Pitfalls of Advice Seeking by CEOs” runs over eight pages in the magazine, including several illustrations that underline the findings by Yasemin and her study co-authors, Dr Shenghui Ma of Fudan University in China and Professor David Seidl of the University of Zurich.
“Advice seeking is an indispensable step for a CEO’s decision-making process,” says the article in Harvard Business Review China, which adds that CEOs can “efficiently leverage advice” through building a diversified advisory team and continuously updating their advisor network.