The Secret Life of the CEO: Do they even know right from wrong?

Perhaps we understand now. Or we're starting to. The corporate CEO is not the epic hero we once imagined. Now we know: He was never as smart or as right or as, well, together as we had hoped. His teeth aren't perfect either. But let's not go overboard: He's also not an epic sociopath. CEOs are only as culpable for all that has gone wrong with business in the past year as they were responsible for all that went right in the previous years. Which is to say that whatever they have done or failed to do doesn't explain everything. It doesn't even explain most things.

The truth behind the current episode of corporate comi-tragedy has plenty to do with the men (and they are mostly men) who are running the show -- but not in the way that we've always thought. All of our post-Enron hand-wringing about CEOs having values and "walking the talk" isn't wrong, exactly. It's just that it's not exactly right either. The truth is more shaded than that.

The truth is this: CEOs are flawed individuals who are operating in a complex, imperfect world. They are no more or less honest than the rest of us -- in fact, "honesty" almost misses the point. The point is, they negotiate a razor's edge between knowing one thing and having to say another.

They are intensely driven to achieve and they operate in a marketplace that measures achievement almost wholly in the short term. They confront a world that moves faster than ever before, and really, there is little about their unwieldy organizations that they easily control.

It's not that we've suddenly promoted a new generation of CEOs who are somehow badly flawed. On paper, these CEOs are pretty much the same as the ones who ran companies a decade ago. Today's average big-company CEO is 56 years old, is male, and has been with his company for 18 years, according to a survey by Chief Executive magazine and head-hunting firm Spencer Stuart Inc. As a group, they are very well educated: Thirty-seven percent have MBAs. They know numbers, and they understand the inner workings of their companies: Some 22% have come up through finance, and another 14% have toiled in operations. That's not what's different.

What's different is the sandbox that today's CEOs play in. The sand started shifting in 1993, the year that professional managers took on investors -- and lost. In the same week, the CEOs of American Express, IBM, and Westinghouse all resigned under pressure -- basically because their companies' financial results were lousy. In the years that followed, executive pay was increasingly tied to company performance: More stock; more options.

For a while, that sort of accountability seemed like a pretty good thing. But in the late 1990s, stocks soared -- and so did investors' expectations. If you were a CEO, and you cared about your stock price and your own paycheck, you heeded the complaints and demands of the research analysts at big brokerages whose utterances could send your stock into orbit -- or down the drain. Says William George, who retired in May as chairman of Medtronics Inc.: "The pressure is always with you. You can't escape it, even for an hour."

"It was unrealistic," says David Nadler, chairman of Mercer Delta Consulting and adviser to a number of big-time CEOs. "But if you were the CEO, there was the perception that if you slipped, your stock price could plunge. There was the temptation to think, 'If this is a short-term problem, I can shore it up.' There are tremendous temptations from the system to cut corners."

In the face of such demand for short-term results, you could shore up your business. Or you could try. But in real life, big-company CEOs only wield so much authority. "We're just human beings running battleships, and battleships don't turn easily," says Stephen Berger, a former top executive at GE Capital who now heads Odyssey Investment Partners LLC.

For all that's written about CEO charisma, power, and authority, chief executives, it turns out, rarely can make their companies change through an executive edict. Instead, they build coalitions and seek consensus. "A CEO doesn't make decisions," says the founder of one of the most prominent dotcoms of the 1990s. "The job is mostly the art of balancing interests and dealing with shades of gray. CEOs are often frustrated because they can see where they want to take the organization, but they can't get the organization to go there."

Here, then, is the true essence of the CEO syndrome: It's not that chief executives are especially dishonest, corrupt, or inept. The real problem is, they're alone.

"Being a CEO really is a lonely job," says James Maxmin, who has headed Laura Ashley PLC, the consumer-electronics branch of Thorn EMI, and Volvo UK. "With your subordinates and your peers, you need to have a degree of detachment. There's some detachment from your board too, because they are evaluating you. So you become cocooned in your own self-importance."