Living close to the office can help CEOs perform better at their job and create a stronger working relationship with their workers, a new study says.

Researchers from top-rated business school INSEAD sought out to determine how chief executives can help a healthier and more productive workplace for their employees. Dubbed “neighbourhood CEOs”, these business leaders often display an affinity towards their neighbourhood, whether geographically or culturally.

The research team found that CEOs who live near their place of work enjoy several benefits such as getting fewer remarks from regulators regarding subpar workplace conditions. Workers also tend to have a more positive impression of their working environment when their bosses live close to the office.

Measuring the impact

For the study, the researchers collected data from over 70,000 firms between 2008 and 2015, focusing on “administrative remarks” to assess an organisation’s performance regarding workplace hazards such as safety issues and violations. The team used these remarks as a way to measure the quality of a company’s work environment.

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The researchers also looked at data from two comprehensive surveys. The first survey involved workers sharing their perception of their work environment. The second one showed what company leaders and employees thought about how their companies handled workplace issues.

To build a neighbourhood measure, the team factored in the addresses of the company HQs and the workers’ residences. The CEOs’ birthplaces and residences were also considered for the measurement. These data sets were used to determine how much the bosses felt culturally embedded in their local community. 

Benefits of CEOs living near the office

The study found that chief executives who lived within 5 kilometres of their workplace received fewer administrative remarks. By comparison, those who lived farther away from the office received more remarks, pointing to the possibility of poorer working environments.

Meanwhile, employees who had bosses that lived near the office were more likely to feel positively about their work. They felt more involved in the decisions being made in the workplace. 

The workers also believed their work environment was fairer, more inclusive, and more accommodating of their special needs. This suggests that their CEOs have adopted management styles that prioritise the welfare of their workers.

The INSEAD team also discovered a relationship between the CEOs’ level of engagement with their local community and their company’s workplace conditions. Bosses who were more engaged with their neighbourhood had significantly fewer remarks. Their company experienced fewer instances of conflict and were more supportive of their elderly employees. In general, workers in these firms felt more satisfied with their working conditions.

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The potential benefits of neighbourhood CEOs go beyond merely improving workplace culture. These bosses can also provide tangible results for their company’s bottom line. 

Firms with poor workplace culture were 3.7% less productive, according to the researchers. If employee productivity is used as a potential profit driver, this means that companies with lower labour productivity won’t be as profitable as those with higher productivity.

The INSEAD researchers acknowledged the challenges of providing a causal interpretation of the study’s results. However, the findings suggest that having a high-quality workplace can improve a company’s performance. This can be done by helping their workers become more productive.