The Happiness Advantage: How CEO Job Satisfaction Influences Ambidexterity
While it may seem to be counterintuitive given their professional success, statistics have shown that CEOs often experience job dissatisfaction. This can be attributed to a multitude of factors, including the demanding, stressful, and uncertain nature of many high level careers. In fact, many fortune 500 CEOs end up occupying their position for only four or five years due to feelings of discontent within their professional lives. Psychology research has further substantiated this claim, indicating that there is little to no evidence directly correlating happiness with income. So, you may be wondering why the satisfaction of a highly paid CEO should be of any concern to the rest of us? In a lecture hosted by the University of Michigan ICOS series titled The Happiness Advantage: How CEO Job Satisfaction Influences Ambidexterity, David Zhu draws upon research from a sample of Chinese entrepreneurial firm CEOs to highlight the importance of executive job satisfaction in the “ambidexterity” and overall success of a business.
Ambidexterity speaks to a firm’s ability to balance exploration and exploitation within their company dynamic. Exploration is the notion of generating new knowledge and developing new products for emerging customers. It is key for the long-term success of a business and can be achieved via a professional climate that encourages autonomy, experimentation, and divergent thinking. While exploration is certainly vital in its own right, a business can only survive the short term through appropriate exploitation. Through efficiency, focus, and control, exploitation builds upon previous knowledge and serves to extend existing products to existing customers. When firms are able to develop an equilibrium between these two forces of exploration and exploitation, stability and profitability can be projected in both the short and long term. Such ambidexterity can be achieved by establishing distinctive subunits that conduct exploration and exploitation separately, each with its own structure and process. Furthermore, selectively integrating resources between such submits can assert a sense of synergy that manages tensions between the two. When implemented correctly, ambidexterity is seen to be positively associated with innovation, firm growth, and financial performance.
While establishing a keen sense of ambidexterity is clearly vital for a firm’s success, it cannot be fully achieved without the guidance and control of a strong CEO. Research shows that top executives play a crucial role in developing and influencing ambidexterity. They have authority over determining organization design, shaping the corporate vision, establishing a company culture, and effectively allocating resources. With this power comes grave responsibility, as firms become reliant on a satisfied CEO to properly execute what needs to be done. The happiness advantage speaks to the notion that, when a CEO is satisfied in their position, strategy and firm performance can be greatly impacted for the better. Job satisfaction is seen to substantially enhance creativity, ease turnovers, improve decision making, and encourage prosocial relations. Better relations with subordinates can promote understanding of internal and external activities. A stronger commitment to work, as seen through the happiness advantage, can help to better promote ambidexterity and the mediation of ongoing subordinate conflicts. Finally, an overall positive temperament at work can encourage flexible thinking and efficient information processing. In analyzing the immense role that CEOs play in managing the structure and dynamics of a company, it is clear that more attention must be paid to the topic of satisfaction in relation to business success.
In taking into account the human side of the professional world and recognizing the attitudes and emotions of our executives, we can aim to establish a work environment that is not only more positive, but more lucrative as well. Studies show that CEO job satisfaction can mainly be accredited to a blend of both dispositional and situational factors. The dispositional approach speaks to job satisfaction that is linked to individual attributes and unchanging personality traits while the situational approach speaks to the influence of more concrete elements such as job demand, organizational design, etc. While more research is necessary to establish the concrete ways in which to address both dispositional and situational factors, it is clear that happiness plays a much larger role in corporate success than was ever previously imagined.
To watch the lecture online and gain access to the relevant reading materials, click here!
To visit David Zhu’s page, click here.
