CEO DUALITY AND ITS IMPACT ON FIRMS PERFORMANCE
There are many firms that allow their Chief Executive Officer to handle dual position while some firms simply divide their duties to focus their job from another executive privilege, you may heard of President and CEO or Chairman and CEO which in itself is a different position but handled by the same person. This is not just a form of ownership but it can also be another reason like company preferences, staffing and attrition of members. Whatever reason it may be, the real issue here is how the CEO’s dual position has been handled with respect to their performance and the company’s position and effectiveness in management having one person handling two different position at the same time.
There are also times that CEO and Chairman have two different positions in the company but there will be time that they have to join this position in one because they may feel that the joint position in their company may strengthen the management decision making power and effectiveness in the cooperation relay to the board. This condition may be evident to their plan or testing methodology to work although there are companies who dealt with this successfully.
The effectiveness of the company involve the whole organization rather than the CEO but this position is basically the most powerful among them that is why CEO duality may have some impact on the part of the stock holder or the board of directors since the duality of the position gives additional power to the CEO and therefore manipulation of decision. Some board may have to question the duality and power especially if they are not performing well and their company is at stake.
Asymmetry and control is also a question of duality, a person who handles the same position may become powerful that they make take advantage of their position to control all parts of the organization. This usually happens in the government if the President will also be the Chief of staff, this duality may be so much powerful that may create a threat of autonomy and dictatorship in the government people arise to oust their President, this happens in many parts of the world. The question of the duality therefore is the over power and its mishandling. The person who held the same position may soon be greedy to hold on to their position because of so much luxury, physical and monetary advantages and the fame they may experience during their terms.
Usually even some of the board of directors who has a big share of the company’s stocks is controlled by the CEO that is why they have even more power to stay longer in the company, the only time that some board will have a chance to vote out the present CEO is when they can buy a greater share of stocks in the company. Therefore checks and balance may always be in advantage of the present CEO. Even the stock holders meeting could not withstand the power of the CEO duality.
There may be times that the duality of the CEO can be divided if the company is having a decline in their position or if the competition has taken over their performance to the market. This may be a ground for division or even replacement of the CEO but this is not the usual case. A person who dominate a position will retain his position in all its power that is why they may commit to their firms just to handled the same position and thereby their power at the same time.
The government may also act as moderator to handle the company’s constraint. They may have the power to legislation and resolution to corporate conflicts depending on the severity or judgment that constitute the corporate responsibility to its government and concerned consumer. There are also times that government may buy the authority to ownership of a company if they have the ability to do so. In this case the government will be the one to take full responsibility depending on their share to the company, they will be given the same seats and power to the board decision making power as well as the opportunity to vote for administrative positioning. Company’s like Sears and Roebuck, Chrysler, etc. have resolved their CEO-chairmanship dispute publicly.
In reality whether the firm have a CEO duality or they have joint or split their position doesn’t guarantee that the firm will be more successful. The real control and power of the firm is the ability of their CEO and top executives to perform their duty with pure passion and reliability and a desire to work towards the welfare of their company.
Credit:ivythesis.typepad.com
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