Read article “Should the Chairman and CEO Roles Be Held Separately?” on Canvas in chapter 11 module and write your opinion whether the two roles should be held separately. Make sure to briefly describe the responsibilities of each role.
Required:
Your post must be at least two paragraphs and make sure to include enough text to answer the question completely and concisely.
I also expect you to use one additional source such as online resources and/or articles. You might use Google Search or other search engines or, you may
desire to use the West Valley College Library.
Place the name of this source at the end of your discussion. For online references give the web address (URL). For articles, such as those from the WVC
Library, give the author, title of the article, and date.
Respond to two classmates’ posts. Note: Your responses to your classmates’ posts should promote further discussion.
This should be an ongoing discussion with each other during the week.
Keep it short 3 sentence each one Reply back:
Combining the Chairman and CEO roles is similar to giving the President to the United States the ability to make laws; it comes with a great deal of unilateral
power. The board of a corporation is intended to function as a body of oversight and strategic advising, while the function of a CEO is to make and implement
decisions. The CEO often holds the role of Chairmen in American corporations, at an average of around a 50% rate. It is a much rarer phenomenon in Europe,
close to 10% of Stoxx Europe 600 companies. It is an interesting correlation that American companies seem to have a higher rate of large financial scandals;
Kenneth Lee Lay was the chairman and CEO for Enron, and Dick Fuld held both positions for Lehman Brothers at the time of its collapse.
The combination of these two roles will have an exaggerated effect on an organization based on the officeholder’s decisions, for better or worse. The
combination of roles can expedite the gap between approval and implementation, which is a critical feature for a young or high-growth company. A stalemate
between the board and executives can result in missed opportunities that can be seized by an executive who also holds the chairman role. With poor
leadership, a bad situation could become much worse. A CEO who also controls the board as chairman can act with less accountability, and make binding
decisions without waiting for agreement or time for strategic analysis. Since the board also determines executive compensation, a greedy executive can take
advantage of the combined position to personally enrich themselves at the expense of the company.
I think that combining the chairman and CEO roles is potentially useful and highly necessary in a young competitive that needs to make decisions rapidly to
survive and sustain high growth. The merger of these roles at an established corporation with vast resources could easily result in abuse or lack of oversight
and due evaluation or planning. Look only to the examples of companies such as Enron and Lehman brothers that combined the roles to the destruction of
their respective companies.
2.There are a few key reasons why I believe that the Chairman and CEO roles should be held separately. Them being; checks and balances, independent
board leadership, board effectiveness, and accountability and transparency.
A system of checks and balances is established inside the business by separating the Chairman and CEO responsibilities. The Chairman can independently
oversee the CEO’s choices and activities as the head of the board of directors. This can lessen the possibility of future power abuses and helps avoid the
concentration of power in the hands of one person. The board of directors is guaranteed to have an independent leader who can impartially assess and
direct the CEO’s performance when the jobs are held by distinct people. The Chairman can promote robust debate and decision-making in the boardroom by
representing the interests of stakeholders and shareholders.
Separating the CEO and Chairman positions also improves accountability and transparency. While the Chairman monitors the CEO’s performance and
defends the interests of shareholders, the CEO may concentrate on the operational elements of the business. The boundaries of power and responsibility are
made clear by this division, which makes it simpler to hold people accountable for their actions. The efficacy of the board of directors can be improved by
having an independent chairman. They may make sure the board runs smoothly, encourage open dialogue, and offer leadership and direction to the board
members. The process encourages a decision-making process that is more informed and collaborative.
Please, let me know your thoughts on my stance!