Recently, four professors looked into the work life of chief executive officers at major companies. Of course, they came back with some interesting data analytics.
Harvard Business School Professor Raffaella Sadun and three of her colleagues dived deep into the impact the CEO’s time had on the success and failure of a company. The test was conducted in Italy by Sadun and her colleagues, Oriana Bandiera and Andrea Prat of the London School of Economics and Luigi Guiso from the European University Institute.
The research team followed 94 top managers. The full research report can be found in the paper, What Do CEOs Do?
Researchers used a time diary to capture the data of how CEOs spend their time. The personal assistants of all 94 top managers were tasked with filling in the diary with how long the CEO worked on an activity and who was involved – insiders (employees) or outsiders (anyone outside the company). They also categorized the insiders by their job function.
Do CEOs Really Need to Be Out of the Office So Much?
According to Sadun, “CEOs should be working with constituencies, insiders and outsiders. However, if there are governance issues, there might be the possibility that the CEO is in the outside world more for his or her personal benefit than for the benefit of the firm.”
So, they put this hypothesis to the test by tracking what every CEO did for more than 15 minutes during a period of one work week.
A majority of the time, the CEO was spent working with others in meetings, phone calls or public appearances. The breakdown looks like this:
- 42 percent – insiders only
- 25 percent – insiders and outsiders
- 16 percent – outsiders
The other 15 percent of the time, a CEO spent his or her time working alone. Even though it varied widely, the sample of CEOs spent about 20 percent of their time out of the office.
How Productive Are CEOs?
Here’s where the data really starts to add up. The researchers figured how productively the CEOs were using their time against company performance factors such as profits per employee.
- CEOs who spent more time at work increased productivity. Every time a CEO added a 1 percent increase in hours worked, company productivity improved over 2 percent. Sadun said it’s not surprising, but that it had never been documented before.
- Spending time with insiders results in more productivity, more profits. For every 1 percent gain in time with insiders, the firm’s productivity rose 1.23 percent. Interestingly, the same could not be said about outsiders.
- Stronger governance = more CEO time in the office with insiders. Sudan and team factored in the quality of governance to see if that made CEOs more productive. The result? Stronger governance meant that CEO time was focused on insiders and productive matters.
While Sadun recommends caution for making “causality statements” from the findings due to the sample size, this is the largest “What Do CEOs Do All Day?” study to date. Additionally, the team plans to extend the research to include the United States, India and China as well as cultural differences.
Measuring = Gains in Performance
The underlying message of this study is that collaboration with insiders is a key to gains in performance. And, how organizations are using tools to improve collaboration is the subject of a new survey from Babson College. Please help them collect data on how your business uses data analysis tools here. Also, check out this recent Spotfire webcast to learn how collaborative data analytics tools can give you the power to make better data-driven decisions, faster.
Spotfire Blogging Team