CEO: Power, Accountability, And Transparency In Corporate Governance And Leadership

CEOs bad behavior practices and ways to improve them

The CEO represents the top management in the organizational hierarchy. Accordingly, some of the CEOs feel empowered and start to use their powers in a disruptive way as no one oversights their decisions.

Governance is committed to ensure fair treatment of the organizational stakeholders, either inside or outside the organization. Transparency increases the trust between the stakeholders and the CEO. Also, good communication between the CEO and the employees enhance the decision making process, solve complex problems, and create a better work climate.  Ethical issues should be considered in the governance structures, as it leads to better awareness of CSR, and support of the strategic goals of the organization (Lock & Seele, 2016). The CEO should consider the cultural differences among the stakeholders, by considering individualism and collectivism which shape the core values affecting individuals and groups.

The following section discusses the CEO misuse of power, ways to improve accountability, and transparency through ethics, governance and CSR. Also, different theories that deal with the high performance leader are analyzed. Finally, the CEO role in creating an attractive climate for the employees is discussed, including, a variety of aspects that should take place within the organization.

The power abuse by the CEO involves unethical, and autocratic leadership behaviors. The employees are negatively affected by the divisiveness tension, and secrecy of information. The CEO may consider that governance is a waste of time arguing that learning by doing is more preferable. The ethical leadership style is required to balance between the needs of the stakeholders and the CEO individual needs. The ethical leadership success depends on the ability of the leader to influence people towards shared values, beliefs, and principles that embrace trust, justice, dignity, and honesty. The CEO should believe in the importance of the ethical behavior to effectively lead the organization towards adapting the ethical concepts. The shareholders should be and feel empowered through knowledge building, knowledge sharing, and participative decision making (Rintoul & MacLellan, 2016). It is important to the CEO to realize the basics of the good governance to effectively communicate with the internal and external stakeholders.

Corporate governance

Among a variety of solutions, a structural fix solution argues that it is preferred to split the roles of the CEO and the board of chair, by hiring two different persons, and the chairperson should be independent of management. The separation between the management and the board is considered a corporate reform to increase the board’s autonomy, power, and independence which leads to more oversight of management, and improves the corporate governance. The advantages of separating the management from oversight, include, the balance of workload, as the chairperson shares the workload with the CEO. Some activities are best carried by an independent chairperson as the long term perspectives, while the CEO focuses on the short term activities. Also, it is more beneficial to the shareholders to deal with two leaders to improve the decision making process (Wyman, 2017). The leadership separation between the CEO and the board of chair positions can limit the bad behavior of the CEO as the chairperson oversights his behavior and limits his misuse of power.

Corporate governance

The corporate social responsibility (CSR)

CSR responds to both the internal and external stakeholders’ needs. Also, it creates a good reputation for the organization through communication and the degree of responsiveness. The CSR guarantees transparency, responsibility, accountability, and fairness. The CEO of any organizations is expected to consider the four dimensions of the CSR from the internal and external stakeholder perspectives (Lock & Seele, 2016). The employees need to be fairly treated by their CEO, who responds to their needs, and communicate with them in a credible way.

The servant leadership

This leadership style aims to serve the shared values, and needs within the organization and the external stakeholders as well. He encourages the process of facilitating the requirements of employees by enhancing the collective problem solving. The servant leader takes the responsibility at all levels, and promotes for the strategy of shared governance. He is highly committed to the organizations’ purposes and to employees conduct ordinary tasks on a daily basis to fulfill the organizational goals (Rintoul & MacLellan, 2016). The servant leader is an ethical leader who balances between the organizational goals and the employees’ needs and do not use his authority in a disruptive way.

As the CEO represents the top management, he is the responsible person for creating the organizational structure, and a system that promotes stability. He is responsible also for managing conflicts, reducing complexity, and enhancing the efficiency, by ensuring that the employees are doing their tasks to fulfill the organizational goals. The CEO could act as a manager and could also act as a leader who is able to perform significant changes within the organization. The manager is the person who do things right, but the leader is the person who does the right thing (Nguyen & Ording, 2016). To act as a manager or as a leader is a matter of change mindset of the CEO.

The CEO could act in an ethical way, as ethical leadership theories discuss a variety of approaches. According to Dion (2012), the directive leadership approach is directed by social, and cultural expectations. It is the leadership expected by most of the employees, as it respects the basic human rights. The CEO who would accept the qualities, actions, and characters which are generally accepted by most of the employees is considered an ethical CEO.

Cultural differences among stakeholders, in terms of values, behaviors, and attitudes of individuals affect the leadership of the organization. The CEO is likely to provide followers with direction, and protection in exchange for their commitment and loyalty (Jogulu, 2010). Managing the cultural difference is a complex issue that requires experience and flexibility in dealing with cultural variations.

Other theories that explain the higher performance of the CEO could be discussed according to Ahmed et al., (2016) as follows:

• The trait theory: This theory argues that the leaders are born with certain physical traits that distinguish them from ordinary people. These traits could be generic, as the height, and intelligence, or acquired as the self-confidence, and effectiveness traits.
• The contingency theories (Situational): these theories argue that the leadership style is a function of factors, as the situation, and the quality. Accordingly, there is no one right way to lead effectively, as the leader adapts to the situation. The environmental changes, and the internal changes affect the leadership style. The leader transforms his style between the relationship oriented, and the task oriented.
• The style and behavior theory: It acknowledges certain leadership skills required for a leader to perform an act. These skills vary according to the situation, as one style cannot continue to be effective in all situations. This theory introduces three types of leadership, the first, is democratic leadership that motivates the employees, encourage their creativity, and ensures their satisfaction. The second, is the autocratic leader, who focuses on the quantity of output. The third, is the laissez faire leader, who relies on the followers in taking decisions and managing the work, and do not interfere in the main work process.
• The process leadership theory: This theory discusses the servant leader, who focuses on fulfilling the followers’ needs to ensure their satisfaction. He recognizes the followers as equal, and he acts for their needs more than his individual needs (Ahmed et al., 2016). On the other side, the process theory considers the charismatic leader, who acts as a role model for the followers. He promotes shared values, enhance enthusiasm among the employees, and promote for shared vision (Yahaya & Ebrahim, 2016). This leader can guarantee hard work of the employees through his unique characteristics.
• The transformational theory: This theory assumes that the transformational leader involves the followers in the processes related to their individual characteristics. The leader engages in interactions with the followers as they have shared values, and goals. The performance of the team is high, as the leader influences the higher order needs of the followers (Harper, 2012). The transformational leader is a visionary leader, who leads his followers towards fulfilling the organizational goals.
• The transactional theory: It assumes that the leader and followers have special agreements. As the followers fulfill their tasks according to pre specified criteria by the leader, who in return promises to reward them(Ngozi et al., 2015). Accordingly, both the leader and the follower influence each other, the high performance employee is rewarded, and the low performance employee receives negative feedback.

For the CEO of any organization, he should consider some important issues when acting as a leader, as follows:

• Organizational climate: The organization has to lay the ground rules which the state organs function accordingly. These rules are usually accepted by the employees when they add value to the organization (Ajomboh, 2016). The CEO has to manage the organizational climate in a satisfactory manner that maintains a minimum level of tension.
• Teamwork: the CEO who acts as a transformational leader can inspire the followers through the challenging goals, and the energizing vision towards fulfilling the organizational goals in a high level of motivation. This leader can create a harmony between the team members from one side, and between the leader and his followers from the other side (Afsar et al., 2014). The leader influences the team, and the team influences the leader as well.
• Flexibility: leadership is an ongoing process which develops over time. The relationship between the leader and his followers develops over time through incremental experiences (Palanski et al., 2016). The transformational leadership style fulfills the higher needs of the followers, ensures flexibility, and creates a motivational climate to ensure better performance of the employees. Being flexible with employees leads them to feel independent, and encourages them to act in the best performance.  
• Organisational community: Most of the employees desire a good working environment, where they can find social wellbeing. The organizational commitment means that the day to day lives of employees who come to work need to provide an image about themselves to create enjoying relationships with other colleagues apart from the organizational rules (Wan et al., 2010). The CEO who allows the employees to practice their social relations at work place are highly preferred by the employees as he allows them to practice good relationships with each other.
• Loyalty: Employees are loyal to their workplace, when they believe in the organizational objectives, accept them as their own, realize they act for their common welfare, and they do not wish to leave (Chanel, 2015). The CEO who motivates the employees by tangible and intangible motivations is likely to retain the talented employees at the workplace, as they feel satisfied, recognized, and admired.
• A trusting workplace: Trust between the CEO and the employees is very important, as the employee who feels with high morals, is more likely to do his work more effectively. A considerable amount of work could be accomplished through good interpersonal relationships. Trust between the leader and the follower motivates them, as they feel empowered, and behave in alignment with the organization’s objectives, goals, and values (Zeffane, 2010). Building trust among leaders and followers is likely to enhance the organizational performance.

Conclusion:

The CEO represents the top management in the organizational hierarchy. Accordingly, some of the CEOs feel empowered and start to use their powers in a disruptive way as no one oversights their decisions. Governance is committed to ensure fair treatment of the organizational stakeholders, either inside or outside the organization. Transparency increases the trust between the stakeholders and the CEO.

The power abuse by the CEO involves unethical, and autocratic leadership behaviors. The employees are negatively affected by the divisiveness tension, and secrecy of information. Among a variety of solutions, a structural fix solution argues that it is preferred to split the roles of the CEO and the board of chair, by hiring two different persons, and the chairperson should be independent of management.

The ethical leadership style is required to balance between the needs of the stakeholders and the CEO individual needs. The shareholders should be and feel empowered through knowledge building, knowledge sharing, and participative decision making. The CEO could act in an ethical way, as ethical leadership theories discuss a variety of approaches. The directive leadership approach is directed by social, and cultural expectations. The CEO who motivates the employees by tangible and intangible motivations is likely to retain the talented employees at the workplace.

References:

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