Over 70% of CEOs Experience Clinically High Stress Levels, Mainly Due to Performance Pressure and Cost Management - BCG Survey

Boston Consulting Group (BCG), a management consulting firm, has released a report titled "What (and Who) Is Keeping CEOs Up at Night?", which analyzes the stress factors faced by CEOs. This report is based on BCG's first-ever survey, combining an questionnaire survey of 500 CEOs leading companies with revenues ranging from $100 million to over $5 billion, and data analysis on CEO turnovers within S&P 1200 constituent companies.

Top Stress Factors are Performance Pressures such as Growth Targets; CEOs Spend Much Time on Immediate Challenges

When CEOs were asked to rate their work-related stress on a scale of 0 (no stress) to 100 (extreme stress) for the most recent quarter, over 70% were found to be at a clinically high stress level, with an average stress score of 66.7. The main stress factors were traditional performance pressures such as "achieving growth targets" and "cost management" (Figure 1). Furthermore, 57% of respondents reported spending significant time on short-term issues, suggesting that addressing long-term risks and opportunities might be being deferred.

Judith Wallenstein, Managing Director & Senior Partner at BCG's Munich office and co-author of the report, states: "Balancing short-term goal achievement with long-term growth has always been a major stress factor for CEOs. However, today, this must be achieved within a shorter timeframe and under the stringent oversight of a more discerning board. The boards themselves are under intense pressure, and that tension is being passed on to CEOs."

Internal Stakeholders Become Major Pressure Factors

In fact, looking at stakeholders individually, the "board of directors" was the biggest stress factor, followed by "employees" and "management teams" (Figure 2). Nearly 90% of CEOs reported having strong relationships with their boards, yet the board is identified as the most stressful stakeholder group. One in three CEOs feels they must demonstrate more results to their board compared to six months ago.

Management teams ranked among the top 3 stress factors, and for CEOs of large companies in particular, they are the biggest source of stress. Furthermore, over a quarter of CEOs named the CFO as the executive most likely to threaten their position among the senior management team.

"Shareholder Activism" and "Employee Dissatisfaction" Potentially Overlooked

CEOs often focus intensely on current performance, but their perception of long-term risks that could affect their tenure might be out of alignment with reality. The report highlights that several factors closely linked to CEO turnover are ranked relatively low as current stress factors. Specifically:

- Low Awareness of Shareholder Activism: BCG's analysis reveals that being targeted by activist shareholders increases the likelihood of CEO turnover by 24%, yet activists are categorized in the lower stress factor group. Amid intense pressure to achieve short-term results, if a strong shareholder base supporting long-term strategy is not sufficiently built, activism could emerge as a real risk during periods of fluctuating performance.

- Underestimation of Employee Dissatisfaction: According to BCG's analysis, if the net employee growth rate [Note 1] decreases by 10%, the likelihood of CEO departure increases by 12%. However, employee dissatisfaction is not a high-priority issue for many leaders. Fewer than half of CEOs express concern about rising employee dissatisfaction, and insufficient response could lead to increased turnover.

- AI - Potential for Future Pressure: While expectations for investment returns are rising, AI ranks 9th out of 11 stress factors. 84% of CEOs report feeling more motivated than stressed by the need for innovation. This is likely because AI has not yet sufficiently translated into short-term growth or cost reduction outcomes that are a source of daily pressure for CEOs. However, market expectations will likely increase every time CEOs make announcements regarding AI, potentially requiring them to demonstrate results sooner.

This report highlights the current situation where many CEOs feel their role is solitary, bearing the brunt of pressure from various stakeholders, including boards of directors and employees, and carrying a significant psychological burden.