HEAVY LIES THE CROWN

HIGH ANXIETY OFTEN ACCOMPANIES BEING A CEO

Before joining the Mendoza College of Business, Professor Viva Bartkus was employed for 10 years as a management consultant for McKinsey and Company. Over that decade, she worked closely with countless business executives, and learned that behind many a confident facade was a highly anxious person struggling to meet performance goals.

"Oh my gosh, I think there are more insecure CEOs out there than the world or the press is willing to acknowledge," she said, laughing ruefully.

Bartkus knew from experience how stressful a business executive's life can be, but it wasn't until she began conducting research into the subject with two Mendoza colleagues that she was able to substantiate her intuition. Together with professors Michael Mannor and Adam Wowak, she investigated the effects of high job anxiety on the decision-making process of 84 CEOs and other top executives of major corporations.

The researchers analyzed 154 big business decisions, such as whether to acquire another company, launch a new product, enter a foreign market, or engage in corporate restructuring.

The researchers recruited executives to participate in the study by mining their own personal and business networks. Bartkus was able to persuade many of the executives she had worked with at McKinsey to sign on. Others who signed up were Notre Dame alumni and a range of leaders from both public and private firms.

Bartkus and Mannor spent two years traveling the country to interview the executives, spending at least 90 minutes with each one, usually at their office. To get a fuller picture of the executives' anxiety level, they also interviewed their top lieutenants and asked the executives' spouses to fill out written surveys. "Getting access to these kind of top executives for this type of in-depth study is a very difficult undertaking," Bartkus said. "Historically, researchers have relied on archival research and compensation measures, whereas this kind of work requires getting access to their spouses and really digging into their lives."

What they found during the digging often surprised them. "We tend to think of top executives as the winners of tournaments, these corporate gladiators who are incredibly good at their jobs," Mannor said. "They're often lionized as captains of industry. In reality, Viva and I spent plenty of time interviewing these folks, and they actually differ considerably in their personal characteristics and their comfort level in their job."

Some of the executives were loud and extroverted; others spoke so softly that the researchers had to listen closely just to understand what they were saying. Some were devoted to their families, while others had clearly placed their work first. All of them felt the burden of running a major corporation, although they handled that burden in different ways, according to the study's results.

Based on interviews with executives, their spouses and their management teams, the researchers were able to assign an anxiety level to each leader, which didn't always correspond to the researchers' original intuitions. "The distribution would have been hard to guess based on our initial impressions of them," Mannor said. "People don't always wear their anxiety on their sleeve, which has implications for boards and people who work for them, because you can't always tell what's going on."

Not all of the researchers' findings were a surprise: As they hypothesized, the executives who reported feeling the most job anxiety tended to surround themselves with more supportive management teams, who were less likely to challenge their decisions.

Also as hypothesized, the most anxious executives were biased toward less risky options when it came to major decisions such as acquiring a rival company, entering a new market or launching a new product.

One of the implications of the research is that corporate board members need to form deeper bonds with their executives if they want to understand their real anxiety level. "You need a deeper level of interaction," Mannor said. "So we encourage board members to take a more involved approach to interacting with senior executives to try to understand what they're worried about, and offer different mechanisms to help them cope."

Fortunately, there are a few things corporate boards can do to protect themselves from over-anxious CEOs. They can require top executives to present multiple strategic options before making a big decision, or ask individuals other than the CEO to present alternative plans. In the worst of cases, they may need to replace the CEO.

Psychologists have previously shown that the relationship between anxiety and performance follows an inverted U-shaped curve, with the highest performance coming at the middle level of anxiety. (They even have a name for this phenomenon: the Yerkes-Dodson Law.) This suggests that too little anxiety can be almost as bad as too much anxiety; after all, no company wants a CEO who's completely carefree.

Anxiety itself, Mannor said, is never going to go away completely. "It's hard to make a blanket prescription about the right amount of anxiety. Do we want a timid mouse running the show that is afraid to make any big moves? In certain environments, that might not be a bad idea, if there are strong headwinds in the industry."

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"Heavy Lies the Crown? How Job Anxiety Affects Top Executive Decision Making in Gain and Loss Contexts," by Mendoza professors Viva Bartkus, Michael Mannor and Adam Wowak, was published in 2016 by The Strategic Management Journal.