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11174 Introduction To Management
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11174 Introduction To Management
0 Download6 Pages / 1,315 Words
Course Code: 11174
University: University Of Canberra
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Country: Australia
Question:
Topic: How much power do CEO’s really possess?
Tasks:
• Summary of the assigned debate topic – Briefly describe the main issues in the debate.• Summary of each side of the debate – For each side of the debate, summarise the supporting evidence from the academic literature (i.e., OB theory &/or concepts, research published in peer-reviewed journal articles, etc.). Also describe the perspective or supporting evidence from management practitioners. Note any contrasts between the academic and practitioner perspectives.• Relevant organisation examples – Include relevant examples (e.g., from real companies or realistic scenarios) to illustrate the importance of the debate issue and each side of the debate.
Answer:
Introduction
A chief executive officer (CEO) is the uppermost ranking supervisor of an organization whose main task is to take crucial business decisions, supervising the general manoeuvres, functions and capital of the corporation and behaving as the chief point of contact between the board of directors and corporate operational sections. Their role differs from company to company depending upon the size and overall structure of the organisation.
The CEO is construed to be one of the most popular positions and at the same time least comprehended job as generally there is a notion within people that a CEO has the power to do whatever he/she wishes to, have all the powers in this world, and are automatically proficient. Thus by its nature, the work of a CEO is very wide, covering and addressing to the requirements of employees, customers, investors and the legal side as well. Thus due to the vast arena of work, their powers are also huge. CEO’s are not the owners of the company, they are also employees only, thus even though they possess vast powers yet their powers seem to be limited at some instances. The said debate would discuss about what powers do the CEOs actually possess and how much are fiduciary by nature as they also are ultimately the employees of the company reporting to the board of directors and the promoters of the company.
Powers That Ceo Actually Possess- Academic Perspective
It is believed that although the CEO reports to the board of directors of the company, yet he is the one who is deeply involved into the day to day operations of the company, thereby has the power to take adequate decisions in the best of the interest of the company internally and to some extent, externally as well depending upon the power delegated to him by the board. CEOs do not possess the power to state policies on behalf of the company, but definitely has the power to make decisions which would aid towards confirming to the policies spelt out by the board, thereby confirming that CEO does possess huge amount of powers else it would be difficult to go back to the board for each decision it takes.
Thus their powers are basically related towards making crucial decisions regarding the operational functions of the entity and set the company policies. Thus until and unless the company does not face any kind of a critical issue which may have an impact over its stability, the CEO has been empowered with the rights to make decisions as he thinks is the best. Hence it can be rightly said that CEOs basically possess the powers to micromanage the entity (Sherman, 2018).
For the public, the CEO is the face of the company and therefore he has the power to cater to these as per convenience and needs. Further the CEOs are expected to possess ownership powers which mount up to those CEOs only who preserve possession arrangements in the firms they serve as they in the actual sense cater to both the management and the stakeholders as well (Slate.com.2000). Hence the aspects of CEO power and the financial performance of a company are linked to each other, so much is the power delegated to the CEO. Performance was discovered to be both antecedent condition and outcome of CEO power. Thus as from the academic point of view, the CEOs possess adequate power to run the company as per their terms.
Powers That Ceo Actually Possess- Practitioner Perspective
The above category of power possessed by the CEOs is basically a book related data, however in the practical scenario, the powers differ to a great extent. One of the apt theory associated with this perspective is the Organizational Behaviour Theory, which connotes how people interact with others in the group and this helps to formulate a more effective organization. Thus there powers even though described in the books, yet the kind of behavioural pattern they adapt with the employees, help to formulate their powers as well. Certain powers may not be construed to them but by virtue of the OB theory, the same can be exercised if it is for the well-being of the concern (Daily & Johnson, 1997).
Even though it is understood that they have a wide arena of powers which they can exert in the best interest of the company, but the point of conflict is that what kind of powers they can exercise without consulting from the board of directors. At the time of exigency, they cannot take decisions without consulting the board as these may have a significant implication on the financials of the entity and ultimately the money invested is of the stakeholders and the promoters.
A CEO has to understand the requirements of the board and then use its power. Thus the fact that they have the authority to take strategic decisions, but independence is where the hitch lies. Thus having paper based powers or minor ones is not enough (Glick,2011). Hence the entire concept of CEOs possessing immense power is more academic than in actual practice.
Relevant Organizational Examples
As is discussed, a CEO of a corporate has the power to cater to any kind of role it wishes which would enable fulfilling of the company’s main goals and satisfying the promoter owners as well. Thus they utilise their power while taking over the role of a chief strategist wherein they would be able to address the complexity levels present in the multinational corporations. For example, Coca-cola has 32000 staff members spread over 200 nations =. Therefore the intensity and the speed of alterations look very significant. If the CEO feels that the condition is unstable, then he would tighten his strategies and thereby plan the ways and means of tackling the risks. Thus even though, academic perspective states certain set ways and means handling strategic situations, yet the practitioner perspective makes it clear that the level of power would depend upon the exigency of the situation (Farkas & Wetlaufer,1996). There are times when the CEO has to take a decision irrespective of the fact they possess that level of power or not.
Conclusion
Thus on a summarising note, it is observed that CEOs do possess power but the extent t o which they are used independently is a question due to which people often find themselves in a dilemma. Therefore, the extent of powers that CEOs actually possess is situational by nature. The academic perspective fails to take into consideration the practicality of the situation and the circumstances that would be prevalent at that moment. However, the practitioner perspective too has some flaws such as it although gives powers which are huge depending upon the situation, yet at the same time, the CEO also becomes accountable for the result in a major manner. Although they possess immense powers, yet their hands are always tied up irrespective of the perspective, as they have to think about the interest of the company while exercising any of their powers in any situation.
References
Daily,C.M. & Johnson, J.L., (1997). Sources of CEO Power and Firm Financial Performance: A Longitudinal Assessment. Journal of Management. Vol.23. no. 2. Pp. 97-117. Available at https://journals.sagepub.com/doi/pdf/10.1177/014920639702300201 (Accessed on 08th May 2018)
Farkas,C.M., & Wetlaufer,S. (1996). The Ways Chief Executive Officers Lead. Available at https://hbr.org/1996/05/the-ways-chief-executive-officers-lead (Accessed on 07th May 2018)
Glick,M.B. (2011). The Role of Chief Executive Officer. Sage Journals. Vol.13. no.2. pp. 171-207. Available at https://journals.sagepub.com/doi/pdf/10.1177/1523422311415642 (Accessed on 08th May 2018)
Sherman,F., (2018). CEO vs. Board of Directors. Available at https://work.chron.com/ceo-vs-board-directors-25433.html (Accessed on 07th May 2018)
Slate.com., (2000). What’s the Difference Between CEOs and Chairmen? Available at https://www.slate.com/articles/news_and_politics/explainer/2000/01/whats_the_difference_between_ceos_and_chairmen.html (Accessed on 08th May 2018)
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