Remote CEO arrangements are associated with weaker operating performance and low employee approval, according to a study published May 30 by the HKU Jockey Club Enterprise Sustainability Global Research Institute.
Here are six key findings:
1. Study authors Ran Duchin, PhD, of Boston College and Denis Sosyura, PhD, of Arizona State University in Phoenix, analyzed more than 6,655 U.S. public company CEOs from 2000 to 2019. The core sample included 929 CEOs who lived more than 100 miles from company headquarters for more than 12 consecutive months.
2. CEO locations were determined using proxy statements, employment contracts and validated by voter registrations. The researchers excluded temporary remote arrangements, such as those due to medical leave.
3. Remote arrangements were linked to a decline in operating performance, with no reversal observed during the CEO’s tenure. The decline was stronger when the CEO lived across multiple time zones from the company’s headquarters.
4. When CEOs relocated to headquarters, companies saw improved performance. Conversely, performance declined when a previously in-person CEO moved away.
5. An analysis of 1.5 million employee reviews found that CEO approval ratings fell by an average of 6.2 percentage points following a switch from in-person to remote leadership.
6. Employee reviews frequently cited three concerns under a remote leadership: a short-term focus, a disconnect from daily operations and absenteeism.
