How CEOs Spend Their Time

I often ask CEOs, "How do you think you should be spending your time?" with the follow up question, "How do you spend your time?" The two answers are almost always different. Most feel the should spend more time on strategy and planning but don't because of more urgent matters, i.e., fire fighting.

In his paper, "What CEOs Do, and How They Can Do Better", author Michael Blanding reviews the research conducted by Raffaella Sadun of the Harvard Business School, Luigi Guiso of the European University Institute, and Oriana Bandiera and Andrea Prat of the London School of Economics reported in their paper with the deceptively simple title "What Do CEOs Do?".

They studied how 94 Italian CEOs spend their time and came to the following correlations. (The emphasis here is on the term correlations as opposed to cause and effect.)

They found not surprisingly 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.)

They also found that 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.

This seemed surprising to me as I have always felt that time with customers was always time well spent as a CEO.

Regardless, the researchers were encouraged by the results of the initial study, so they are 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.

Click here for the full article and stay tuned for the results of the expanded research.