Why did you come in late on Tuesday? Did you really need an hour and a half for lunch on Wednesday? Why wasn't that report done by Thursday? For most of us, justifying our schedules is an expected part of the job.
But what employee hasn't looked at the closed door of the corner office and wondered what the boss is doing all day. For all of the minute-to-minute monitoring of employee performance from the time of Henry Ford onward, it's amazing how little any of us really know about how CEOs of major companies spend their time.
"Fundamentally, it's because no one knows what a CEO should do," says Harvard Business School professor Raffaella Sadun. "Most of the time it's difficult to codify the qualities of a good manager."
Despite that difficulty, however, it's self-evident that the way a CEO chooses to spend his or her time has much more of an effect on a company's success or failure than if a middle manager spends a half hour more at lunch. With that in mind, Sadun and three colleagues-Oriana Bandiera and Andrea Prat of the London School of Economics and Luigi Guiso of the European University Institute—set out to get to the bottom of CEO time management by following nearly 100 top managers in Italy, as reported in a recent paper with the deceptively simple title, What Do CEOs Do?
"We had no way of knowing what we were going to find," says Sadun. "We went in with the curiosity of trying to understand the life of a CEO."
But what they did discover should help CEOs learn to be more effective with their time, and provide boards with a new tool to help assess the effectiveness of their chief executives.
Under a microscope
Of course, it's not so easy to codify all of the many actions a CEO could take during the course of a day—attending meetings, reviewing a marketing campaign, schmoozing clients on the golf course. So Sadun and her colleagues instead divided up activities with a much simpler measure of looking at the people with whom a CEO spent time.
After all, the boss is in a unique position within a firm not only to spend time with employees, but also with the outside world, making connections and gathering information. However, not all of the time the boss spends with outsiders might help the firm, especially if a CEO's and a company's interests are not aligned.
"CEOs should be working with both constituencies, insiders and outsiders," says Sadun. "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."
In order to test whether this was true, the researchers enlisted 94 CEOs of major Italian corporations who agreed to put their lives under the microscope for a period of a week at a time. The CEO's personal assistant was asked to record every activity the boss engaged in that lasted at least 15 minutes.
Tabulating the data, the researchers discovered that the vast majority of a CEO's time, some 85 percent, was spent working with other people through meetings, phone calls, and public appearances, while only 15 percent was spent working alone. Of the time spent with others, chief execs spent on average 42 percent with only "insiders" (employees or directors of the CEO's firm); 25 percent with insiders and outsiders together; and 16 percent with only outsiders. (Exact numbers varied dramatically among the sample, with some CEOs spending more than 20 hours a week outside the office, while others spent almost none.)
Next, the researchers crunched a number of factors measuring company performance—for example, profits per employee—in order to see which CEOs were more productively using their time.
Better on the inside
Their first finding, which might seem unsurprising, was that the top managers who spent more time at work were more productive than those who spent less time at work. In fact, Sadun and company found, for every 1 percent increase in hours worked, there was a 2.14 percent increase in productivity. "That's never been shown before, so that was reassuring," Sadun says.
Likewise, time spent with insiders was strongly correlated with productivity increases. For every 1 percent gain in time spent with at least one insider, productivity advanced 1.23 percent. Less reassuring, however, was that the time CEOs spent with outsiders had no measurable correlation with firm performance.
In a final measure of CEO's performance, the researchers rated firms based on the quality of governance, measuring a variety of factors such as the size of the board, the presence of at least one woman on the board, ownership, whether the company was based in another country, and if so, the general level of governance in that country. Again they found a clear correlation: in companies with stronger governance, CEOs spent more time with insiders and less time with outsiders, and at the same time were more productive.
"There are some industries where a CEO really needs to be outside, so we don't need to be proscriptive, but if you were taking these results literally it would tell you that since a CEO's time is constrained, he should be mindful of the time spent with his own employees," says Sadun.
In extrapolating from the data, Sadun cautions the sample size used in the study was relatively small (though exponentially bigger than any past research on the topic), and that the results of the study (especially when it comes to the link between CEO time use and firm performance) should for the moment be interpreted as suggestive correlations rather than firm causality statements. Even so, encouraged by the results of the initial study, the group is planning to continue along this line of research by expanding the data collection in other countries (India, China, and the US) in order to increase the sample as well as to take cultural differences into account.
Sadun says that the group has received nothing but positive feedback from the anonymous CEOs who participated in the study. In keeping with the adage that "it's lonely at the top," many of the managers studied had little idea of how they could make their time more productive. Sadun hopes that the information will be equally helpful for boards in evaluating the performance of their CEOs.
"It's a way to monitor where the efforts of the CEO are going, and to get them understanding that perhaps spending too much time on the outside might not be as beneficial as they might think," she says.
If nothing else, next time employees ask the question "What is the boss doing with all of his time?" at least they'll have an answer. 
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