Want to be a better CEO? Live close to work

Using unique survey and register data, three researchers have found that it strengthens both the working environment and productivity in a company if the chief lives within 5 kilometers of the workplace.

"We have analyzed reports from the Danish Working Environment Authority and workplace assessments from employees. In both cases, the data indicates that CEOs who have local roots and place importance on neighborliness adopt a management style that caters to the employees' well-being," explains Morten Bennedsen.

He is an economics professor at the University of Copenhagen. Together with Mario Daniele Amore, professor at Bocconi University, and Birthe Larsen, lecturer at CBS, he is author of the paper called “Neighborhood CEOs”.

School children plays a part

A third of the companies analyzed by the researchers have 'neighbourhood CEOs'. These companies are 3.6 percentage points less likely to receive reprimands from the Danish Working Environment Authority. At the same time, employees feel “significantly more involved in workplace decisions,” and rated their work environments as “fairer and more inclusive.”

The researchers have made another interesting discovery: The effect of the 'neighborhood CEOs' is even stronger when the children of the chief and the employees attend the same school.

"If you, as a CEO, let your child go to the same school as your employees' children, you will interact more often with the employees on a personal level. And the personal relationship cannot be completely separated from the professional relationship," assesses Morten Bennedsen.

Concretely, the study shows that companies are two percentage points less likely to receive negative assessments from the Danish Working Environment Authority if the CEO's children go to the same school as some of the employees' children.

Many family-owned businesses

Is it only in Denmark that 'neighbourhood CEOs' benefit companies? Probably not, the researchers estimate, but Denmark's relatively small class differences can help to make the effect more significant.

"Division according to socio-economic status due to the school choice e.g., is less intense in Denmark than in other parts of Europe or the USA," highlights Morten Bennedsen.

Another Danish phenomenon that can reinforce the effect of 'neighborhood CEOs' is the country's high proportion of family-owned businesses.

"About half of the companies we have investigated are owned and run by a family. It increases the likelihood that the chief will stay in the director's chair for a longer period and thus builds more and stronger neighborly ties," says Morten Bennedsen.

Regardless of the reasons, the trend is clear: If your boss lives close to the workplace, your working environment is strengthened - and you and your colleagues become more productive.

Read the entire paper here.