CEOs used to mainly manage their team and follow the board’s goals. But nowadays, they’re more visible and seen as the leaders of a company, known for their leadership skills.

Some leaders are naturally good at this, while others learn how to lead. One big part of this is their personality, which shapes how they behave. Think about Steve Jobs, the co-founder and CEO of Apple; his personality had a big impact on how he did business.

A recent study from Singapore Management University (SMU) looked at how a CEO’s tendency to do things that help others, called “prosocial tendency,” can affect a company’s rules and how valuable the company is.

“We view prosocial tendency as a fundamental, innate trait,” the researchers explain. “While effective leaders embody multiple qualities, the findings from our study suggest that their innate prosocial tendency contributes to their effectiveness as a leader.”

Prosocial bosses

To help them identify bosses with prosocial tendencies, the researchers trawled through demographic data from the BoardEx database. They were particularly looking at the activities leaders perform outside of work.

“We use CEOs’ involvement with charitable organizations to proxy for their prosocial tendency,” the researchers explain. “We define a CEO as prosocial if he or she is involved with organizations that the US Internal Revenue Service classifies as charitable.

“We focus on whether the CEO, as an individual, would devote time out of their busy schedule to charity work. Such involvement captures the CEO’s individual behavior, and not their employees’ behavior or company’s policy.”

Business benefits

The study found that prosocial leaders tend to implement more employee-friendly policies, including better training and health and safety. This makes it much less likely that those working under the leader will want to leave the firm.

What’s more, this tends to have a significant impact on the performance of the company, which, in turn, helps it to become more valuable.

“In our paper, we find that prosocial CEOs increase firm value mainly through lowering firm risk. If prosocial CEOs adopt more employee and customer-friendly corporate policies and engage in more CSR activities, these CEOs are likely to build trust with their employees, customers, suppliers, and regulators,” the authors conclude.

“Such trust can be perceived as ‘moral capital,” which manifests in employee commitment, brand faith, credibility to customers and positive reputation among communities and regulators.”