Why CEO loneliness is bad for business

June 29, 2012: 5:00 AM ET

Many CEOs feel isolated once they start their jobs, despite the fact that chief execs these days interact with more and more people.

FORTUNE – For a layperson, it's tough to understand why CEOs make the choices they do. It seems clear, in hindsight, that J.P. Morgan (JPM) CEO Jamie Dimon should have put the kibosh on trading practices that could ultimately cost the company $9 billion. To the rest of us, it looks like there were warning signs.

It also appears obvious to us that Rupert Murdoch could have dodged at least some of the fallout from the phone-hacking scandal if he had a better handle on what was going on at News Corp. (NWS), which announced Thursday that it would split its publishing and entertainment arms into two companies.

Certainly, a myriad of factors influence the leaders of Fortune 500 companies. But one factor that can affect people at the top more than others -- and in a different way than ever before -- is isolation.

Sure, it's hard to pity people with so much money, even if they feel a little lonely every now and then. But isolation, when mishandled, can trigger dangerous communication breakdowns. When CEOs don't trust the team surrounding them, the health of a corporation suffers. Just look at the fallout from board wars at Pfizer or MF Global misplacing some $600 million in its investors' money.

MORE: Are annual performance reviews necessary?

This sort of isolation is prevalent among CEOs, says Thomas Saporito, chairman and CEO of consulting firm RHR International: "The notion that it's lonely at the top is not just a trite phrase. I've been at this for over 30 years, and I've spoken with 200 plus CEOs -- there are precious few that didn't, in the privacy of our discussions, talk about loneliness."

This June, RHR International, published a survey of 100 CEOs who reported, among other things, feelings of isolation. Of those surveyed, 41% said they experienced loneliness in their jobs.

Modern CEOs may feel more isolated than CEOs in the past, in part, because the spotlight is much sharper. For today's leaders, "the biggest difference is that CEOs in this era are undergoing an incredible level of scrutiny," Saporito says. "They're under the gun from just about every which angle. Shareholders, regulators and analysts expect a much greater level of transparency."

To stay out of the CEO bubble, leaders must learn to spot and cultivate genuine interactions among the deluge. While they may have to appear bulletproof much of the time, they also need to find spaces where they can be fallible.  More

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