In the face of tragedy, take some time off
Americans pride themselves on being workaholics -- able to keep grinding away no matter what.
We don’t need
vacations or
lunch breaks anymore. We’re even encouraged to go back to work quickly after a tragedy. “It will keep your mind off of the pain.” Many of us have heard that before.
But, it turns out, if you run your own company, this logic is bogus, at least for the bottom line. New research shows that if the CEO of a company loses a child or spouse, his or her ability to keep the profits rolling in is derailed.
Three finance professors studied thousands of Danish companies, including many small firms, and lay out in their report “Do CEOs Matter?” that profits typically drop following a death in the CEO's family, especially if it was a nuclear member.
In the case of a child’s death, profitability sank more than 20 percent, and nearly 15 percent for a spouse. And I’m not trying to be funny here, but the only family death that actually was followed by a rise in profits was when the CEO's mother-in-law kicked the bucket.
This is one of those studies that makes me go DUH.
Of course losing a child would compromise your ability to work, especially run your own business. I get derailed when my kids have the sniffles or a stomachache. I can’t imagine what would happen if I faced such an unthinkable tragedy.
Indeed, the younger the child, the more of an impact the event has on the CEO, according to the study. The authors also found “the biggest effects on firm profitability in cases where the CEO only has one child.”
The authors go to great pains to explain why they researched these somewhat morbid statistics: “We have argued that analyzing these tragic events is attractive for inference because they provide a plausible exogenous source of variation to (1) empirically assess the importance of managers on their firm performance, and (2) to quantify the interaction between the personal and business roles that managers play.”
“Our results,” they write, “provide strong empirical support to the idea that CEOs are extremely important" to a firm's performance.
This research proves that we are all human, that we can’t just keep going like robots, focusing on productivity and money above all else. No matter how hard we try, our emotions get the best of us.
That’s not a bad thing. It proves we’re alive and breathing.
I interviewed a CEO of a small manufacturer a few years ago whose wife had committed suicide at the height of the firm’s success. He told me he fell apart emotionally and ended up handing over control of the company to two of his managers.
Unfortunately, the company went bankrupt and in hindsight he blamed himself because he was unable to shake off the sadness he felt.
But in the end, he told me, “I may have sacrificed the company, but I didn’t sacrifice me.”
