The psychological impacts of the COVID-19 pandemic on business leadership

Abstract

The COVID-19 pandemic had a profound impact on business leadership, specifically on chief executive officers (CEOs). To document the psychological impacts of the pandemic on corporate leadership, this study analyzed the language of CEOs during company quarterly earnings calls (N = 19,536) one year before and after the onset of the pandemic. Following the start of lockdowns, CEOs exhibited significant language shifts. Analytic thinking declined, and their language became less technical and more personal and intuitive. CEOs also showed signs of increased cognitive load as they grappled with the pandemic's impact on their business practices. The study observed a substantial decrease in collective-focused language (we-usage) among CEOs, indicative of disconnection from their companies. Concurrently, there was an increase in self-focused (I-usage) language, suggesting heightened preoccupation among business leaders. The observed language changes reflect the unique effect of the pandemic on CEOs, which had some notable differences compared to the general population. This study sheds light on how the COVID-19 pandemic influenced business leaders' psychological states and decision-making strategies-processes that have a substantial impact on a company's performance. The findings underscore the importance of language data in understanding large-scale societal events.

Fig 1. CEOs’ language change.

Change in language patterns of Reddit users and CEOs before and after the pandemic. The red line represents Reddit post history in the displayed time range (N = 10,738,506 posts). The blue line refers to all CEO transcripts in the displayed time range (N = 19,536 calls). Vertical Line Represents the onset of the pandemic. Each point is the average score across CEOS (N = 3,044) Reddit users (N = 834,172) at that time block (1 month intervals). The horizontal shaded areas are +/- 1 standard error for each datapoint, vertical shading represent virus surges. The self-focused language is measured using I-words and collective-focused using we-words.

Fig 2. CEOs’ language change over the decade.

Change in language patterns of Reddit users and CEOs before and after the pandemic. The red line represents Reddit post history in the displayed time range (N = 33.7 million posts). The blue line refers to all CEO transcripts in the displayed time range (N = 79,725 transcripts). The vertical Line Represents the onset of the pandemic. Each point is the average score across CEOs (N = 4,707 CEO) and Redditors (N = 1.37 million) at that time block (1 quarter intervals; 3 months). The horizontal shaded areas are 95% CIs for each datapoint, vertical shading represent virus surges. The self-focused language is measured using I-words and collective-focused using we-words. Effect sizes presented are the average effect size at 5 and 10 years for the CEO dataset.