Employee Incentives News: What motivates a CEO?

A study on executive engagement has revealed that most CEOs consider the non-financial aspects of their job much more important than their financial reward, and their motivation is intrinsic – done for the feel good factor, instead of the cash. Whilst there are differences in female and male CEO’s – the biggest change was the interest in ethics and working ethically, which correlates with career tenure and strongly affects how motivated CEOs are. It’s all about value alignment.

The study, conducted by Vlerick Business School and management network Business Leaders, covered a sample of almost 1,000 European CEOs and found that they are mainly driven by ambition and non-financial factors, such as the challenge the job brings with it, the feeling of achieving progress and the pride of working for the organisation.

High salaries have no impact

Study leader Professor Xavier Baeten from Vlerick Business School believes that Boards and remuneration committees incorrectly estimate the importance of financial reward for CEOs. “

This study shows that higher salaries for top executives have almost no impact on CEOs’ level of commitment and satisfaction. CEOs feel strongly committed to the organisation and are generally satisfied with the financial reward. They mainly look at market conformity here. Boards and remuneration committees do not seem to be aware of this and should pay more attention to the perceived fairness of the pay, both by the CEO themselves and by the broader social field. More attention should also be paid to performance management”. According to Xavier the functioning of the Boards and remuneration committees could also be looked at closely: he previously concluded in his 2012 thesis that having a remuneration committee drives up pay for top executives.

Top Rewards For CEOS

• Work climate
• Pride
• Challenges
• Acceptance of change
• Innovation
• Developing management skills
• Work progress
• Clear & challenging objectives
• Collaboration with senior mgt/board Recognition
• Values alignment
• Travel
• Workplace location

Recognition and job security were found to have the least impact on satisfaction for CEOs. 

Engagement is (slightly) higher after serving more than 12 years as CEO and they are strongly driven by Challenge, advancement, pride -but also ethical standards. The study investigated the importance that CEOs attach to ethical business and sustainability.

On average, 69% of the CEOs surveyed chose the ethical solution and 31% the non-ethical solution in the scenarios given.

One of the central conclusions is that female CEOs act more ethically than male CEOs (70% vs. 64%) and notably, female CEOs obtain most motivation from the work climate and cooperation with other members of the top management.

The difference in age also plays a role here: 58% of the CEOs aged up to 45 solved the scenarios in an ethical way, whilst the percentage for CEOs aged 55 and above was 68%. Finally, we can see that CEOs who are shareholders take ethics less seriously. Only 56% of this group made ethical decisions, in comparison with 73% of the CEOs who were not shareholders.

Summary

Joël aan ’t Goor, CEO of Business Leaders, says, “This is the first time that motivation, driving forces and satisfaction have been studied in a group of CEOs of this size from medium-sized and large companies with a distinction made between financial and non-financial factors. We want to share these insights to benefit the business world”.

Learn more: