The CEO (chief executive officer) is the most influential figure in a company: a bad one can wreck a company; a good one makes sound business decisions, propelling their company to success. Yet there are several significant problems with how leading companies treat the role. Not only are performance problems common, but too much emphasis is also placed on the CEO. Too often companies suffer from problems relating to CEOs which are avoidable. Correcting issues will pay dividends over the long-term.
Key Questions Answered
- How do scandals happen under powerful CEOs?
- How can entrepreneurs become successful CEOs?
- Do CEOs have too much influence?
- Why should companies have CEO succession plans?
- Explores the validity of CEO pay
- Analyses the transition from founder to CEO
- Looks at the power wielded by CEOs
- Assesses how scandals can be traced back to CEOs
- Despite lucrative remuneration packages, experience and extensive range of power, several CEOs of major businesses have missed brewing scandal - indeed, in many instances the management philosophy of a CEO has been the root cause of scandal.
- Blind faith in the decision-making abilities of CEOs represents a significant problem for the future prosperity of many companies. Not only that, but stock markets can share faith, inciting jumpy behavior regarding the value of a firm depending on the likelihood of a CEO departing or staying.
- The problems of succession planning can strike even very large and successful companies. Samsung has been thrust into a power structure crisis following the imprisonment of Mr. Lee, the heir to the Samsung business empire. With the current CEO soon to be gone following a high-profile scandal, power vacuums could soon open.
Despite power, CEOs persistently miss scandals
Volkswagen scandal reveals shortcomings of CEO system in major organizations
Wells Fargo demonstrates dangers of CEOs imposing poor working culture on companies
‘Great man of history’ approach does not work on CEOs
Blind faith in CEOs does not help companies to perform better
Illusions about transformative CEOs are unhelpful to company performance
Performance of CEOs can only be assessed years after major business decisions are taken
Succession poses serious difficulties for major businesses
Big changes at Samsung following imprisonment of Lee Jae-yong
Malaysian tycoons strike problems in handing over power to new generation
Succession planning is lacking in many large businesses, storing up future problems
CEO pay - validity arguments rumble onwards
Rewarding spectacular failures undermines belief in CEO worth to major companies
High pay can influence CEO decision making, causing problems to large businesses
Despite holding unfashionable views, advocates claim high pay improves company performance
Entrepreneurs have history of not making good CEOs
Entrepreneurs frequently fail transition from head of start-up to CEO
Founding CEOs can accrue too much power in attempt to solidify control of companies
Many changes are required for successful transformation from entrepreneur to CEO
Problems associated with CEOs need to be addressed to improve business performance
Ask the analyst
List of Figures
Figure 1: Volkswagen share price January 2012 - October 2017 (EUR)
Figure 2: Claytonz Wells Fargo cartoon
Figure 3: Lou Gerstner, former CEO of IBM
Figure 4: Apple share price October 2011 - October 2017 ($)
Figure 5: Lee Jae-yong
Figure 6: Teh Hong Piow
Figure 7: Julius Baer Group share price ($)
Figure 8: CEO-worker pay ratio, based on 2012 figures
Figure 9: Founder-CEO Succession breakdown