This lecture will explore the critical factors that contribute to a positive working environment and how these factors influence both corporate success and employee well-being. We will discuss methods to aggregate existing working environment surveys into firm-level register based data and analyze how different dimensions of the working environment vary across organizational structures. By examining recent academic efforts and specific elements of the working environment, this lecture will provide insights into how a well-structured working environment can enhance both organizational performance and employee well-being.

As a case study, we discuss how firms led by neighborhood CEOs—those who live close to the company and share similar values—tend to have better working environments. We use variations in CEO proximity within multi-plant companies and changes in CEO-firm distance due to turnover events to establish causality. The positive impact is stronger when CEOs’ and employees’ children attend the same school, highlighting the role of social interactions. Additionally, firms led by neighborhood CEOs are more profitable, indicating that these CEOs balance employee welfare with shareholder returns effectively.