Given how much CEOs are paid, how your CEO spends his or her time should have some impact on how profitable or productive his or her company is. But at companies with weak governance, nobody's really keeping an eye on the CEO, and it seems the CEO knows it.
According to research from four professors-Oriana Bandiera and Andrea Prat, of the London School of Economics, Luigi Guiso of European University Institute, and Raffaella Sadun, of Harvard University--at those companies, CEOs spend much more time on activities that are personally beneficial to them and less time on activities that help their companies thrive.
To figure out how CEOs spend their days, the researchers enlisted 94 Italian CEOs and their personal assistants. The assistants kept a diary of everything the CEO did during the week. Some time outside the office and on weekends wasn't counted, so if the CEO had dinner every night with a big client or supplier, the researchers didn't know about it.
What exactly are they doing?
As you might suspect, CEO's go to meetings. A lot.
- Some 60% of CEO time was taken up in meetings
- CEOs spent 25% of their time on phone calls and at public events
- Only 15% of CEO time was spent working alone.
- CEOs spent 42% of their time with insiders-other employees
- CEOs spent 25% of their time in groups that included both insiders, such as employees, and outsiders, such as suppliers.
- CEOs spent 16% of their time as the only company representative with one or more outsiders.
- Among insiders, the finance department got the most time, or an average of 8.6 hours per week. Human resources got the least CEO time, or 5.5 hours per week.
- Among outsiders, consultants dominate CEO time, getting an average of 4.7 hours per week. Suppliers get the least attention, or only 1.3 hours per week.
- As CEOs worked more hours, those extra hours went to meetings with people inside the company, so the hardest-working CEOs spent more time with their own people.
Time spent with insiders seemed to improve firm performance, while time spent with outsiders didn't seem to make much difference. A 1% increase in the amount of hours a CEO spent with his or her own people correlated to increase in productivity of 2.12%. It appears, instead, that the time a CEO spends with people outside the company mostly enables him or her to build their network with other business leaders. This flies in the face of the theory that says a CEO is the public face of a company and therefore should be out meeting, greeting, and golfing as much as possible.
Another factor leading the researchers to suspect that these outside meetings did more for the CEO personally than they did for the company is that these meetings were more common companies that had lax accountability or weak governance. CEOs with smaller boards of directors spent less time alone with outsiders, as did CEOs whose boards included at least one woman. So did CEOs who were hired into a family-run firm.
What do you think your CEO is doing with his/her time?
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Kimberly Weisul is writer, editor and consultant. Follow her on twitter at www.twitter.com/weisul.