Company Culture Impacts How Employees View CEOs: Glassdoor

Improving aspects of company culture can have a positive impact on how employees view the CEO, according to a new study. Employee opinions on senior leadership, career opportunities, compensation/benefits and work-life balance can all affect the CEO’s approval rating, the analysis by Glassdoor found.

The average U.S. CEO approval rating on Glassdoor is 67 percent, with ratings varying widely by industry. Insurance industry CEOs are among the highest-rated (with a 71.8 percent approval rating), coming in fifth behind those in real estate (76.1 percent), construction (72.8 percent), information technology (72.6 percent) and finance (72.4 percent).

What factors go into making a great CEO? Glassdoor conducted a statistical analysis of its CEO approval ratings, which measure CEO quality from the employees’ perspective.

The biggest driver of CEO approval is employee satisfaction with senior leadership, the study found. A one-star (out of five) increase in the senior leadership rating predicts a 37.7 percent improvement in CEO approval.

Insurance industry CEOs are among the highest-rated, coming in fifth on an industry ranking.

Other workplace factors such as career opportunities and compensation/benefits are also statistically linked to higher CEO approval ratings, though at much lower significance. A one-star improvement in perceptions of career opportunities leads to a predicted 3.1 percent improvement in CEO approval, the study found, while the same improvement in compensation/benefits ratings is associated with a 1.6 percent bump in CEO approval.

Other key findings:

CEO compensation is statistically linked to approval ratings, with lower-paid CEOs receiving the highest approval while the highest-paid CEOs received the lowest average approval ratings.

A chief executive’s career path can also impact their approval rating, the study found. Founder CEOs have higher approval ratings than those hired outside the company or promoted internally. In fact, being a founder can lead to a 3.2 percent higher CEO approval rating.

CEOs of more profitable companies generally receive higher approval ratings. When stock prices at public companies are soaring, CEOs are often credited for good times, Glassdoor said, just as they usually take the blame when companies fall on hard times.

One surprising finding is how work-life balance impacts CEO approval ratings. Low satisfaction with work-life balance predicts high CEO approval. Although many workers value work-life balance, Glassdoor believes they are willing to sacrifice it in exchange for “purpose-driven work and a visionary, inspiring leader.”