Corporate Governance Law - Term Paper Example

?Robert Morrison Mr. Morrison had shared that in most mature companies external selection is often the last resort in selecting Chief Executive Officers. The primary reason is that most of these organizations develop or breed their Chief Executive Officer from within the company. The board of directors primarily could ensure that the organization has a deep bench or can develop a deep bench as it matures. The selection process should include an intimate introduction of the organization to the candidates as well as to the board of directors. Mr. Morrison similarly indicated the importance of selecting the right person for the job based on experience, personal qualification and perspective since these are the benchmarks that would be used in guiding the company during the executive’s incumbency. Ilene Gordon Ms. Gordon spoke about the importance of “transition” that could lead to the loss of good senior to mid-level executives if not good projects or initiatives that will become lost as the new Chief Executive Officer assumes his post and get acclimated in his new role. Ms. Gordon emphasized that picking the right candidate often times involves hiring with the least amount of “collateral damage” or “unintended consequences” or what the board does not want to happen. It is equally important for a chief executive officer to have a viable plan or a good strategy in place within a finite amount of time or within the next 365 days after assuming office. It will not do any corporation any good if the Chief Executive Officer will be dilly dallying on what is the right plan to implement to stabilize the organization. Richard L. Thomas Mr. Thomas discussed the selection process that was adopted by First Chicago, wherein the candidates were rotated and given essentially several tasks that involved all aspects of the operation of the organization. The main purpose of which is for the candidate to acclimatize themselves to every aspect of the First Chicago’s operation. The strategy created a racehorse or competition amongst the candidates, which was highly publicized. The effect on the organization was the withdrawal of support or dragging of support to initiatives by employees that supported other candidates. The disruption to the organization caused too much damage and the Chief Executive Officer position became politicized. When the “winning” Chief Executive Officer was finally announced, those involved in the carnage that supported other candidates resigned. It should be noted that some of those executives involved good executives who were caught in the crossfire. J. Erik Fyrwald Mr. Fyrwald described two scenarios that he has experienced directly in his career. One involved a succession planning that resulted in an internal candidate being picked, as the new Chief Executive Officer, and that went well for the organization. The other case involved a search that was directed inwards, however, the tumultuous circumstances within the company at the time prevented the search for a good Chief executive officer. The search, therefore, dragged on for several years leaving the company without any direction. After introspection, it was established that the problem was the weakened executive team that was decimated during the exciting years that Nalco has to go through. Challenges Involved in Chief Executive Officer Succession Several points were discussed by the speakers to amplify the challenges that they have experienced directly or indirectly in Chief Executive Officer’s succession planning or the lack of it. In the same breadth, I will likewise indicate my observation on these points that may be congruent if not contrary to the opinion of the speakers. The chief executive officer has no easy task and responsibility. Primordial of this responsibility is to ensure that the interest of the stockholders is not only upheld at all times, but it is also his responsibility to ensure that the company remains and becomes a good corporate citizen while complying with fealty to applicable government regulations. His responsibility also includes harmonizing the efforts of the entire organization to enable it to meet its targets while ensuring that its partners and other stakeholders are also focused towards attaining the organization’s goals. The divergent interests of these groups most of the time run contrary to each other, thus the Chief Executive Officer most of the time also acts as a consensus maker (Carver and Carver). The importance of the role of the Chief Executive Officer in an organization cannot be gainsaid. The success of the organization is contingent upon the Chief Executive Officer’s performance. His talent must not only include technical knowledge of the organization’s operation but he should likewise be endowed with the acumen to look for common grounds that will make it possible to develop an accord that is acceptable to all. Thus, to ensure an organization’s survival a valid succession planning must be in place to guarantee a seamless transition. Succession planning must also take into consideration the direction of the organization and the current operating environment of the organization. It will be counter-productive to pick a Chief Executive Officer who shall perpetually maintain the status quo or get a Chief Executive Officer who will only focus on the opposite direction while being disruptive of the current situation and to the organization in general (Aspatore Book Staff). Internal Selection The upside of selecting a Chief Executive Officer internally is the political goodwill it will create among the senior executives’ ranks. The learning curve or the time it takes a new Chief Executive Officer to be broken into or immersed into the operation of the organization will be eliminated. The new chief executive officer can hit the ground running so to speak and shall forthwith work towards the direction the organization is meant to take. A succession planning that leans towards internal selection also has the benefit of having the right perspective in dealing with change. An internally selected candidate is more politically aware, if not sensitive, to the culture of the organization, thus ensuring that any change will be positively accepted by the organization in general. The internally selected candidate will also have first-hand knowledge of what needs to be changed structurally or organizationally that he may have failed to implement as a candidate and senior executive of the organization. The downside of selecting a Chief Executive Officer internally is the possibility that the new Chief Executive Officer will just maintain the status quo. Organizations should always be dynamic, if not reactive, as it should be proactive to ensure that it is well prepared for the changing corporate and economic landscape. Even if the organization is doing well or has reached its apex expansion-wise due to a saturated market or other forces, it should be prepared to assimilate itself to a changing corporate environment. The new person entrusted with the position may also use his position to decimate possible challengers to his authority. These behaviours may not surface during the selection process, nor would it be apparent while the candidates are waiting for their turn to be in charge. These types of behaviour are apparent in bad executives who create a lot of discourse rather than consensus. External Selection The upside of selecting Chief Executive Officers externally is that the new executive will have fresh ideas that can be of use within the organization as he assumes his office. The fresh perspective often times are needed by organizations that are currently experiencing difficulties or challenges brought about by market forces within its industry that is beyond its control. Fresh ideas are also needed in responding to the changing landscape of the business environment that requires radical initiatives in order for an organization to survive if not continue to be viable. There are also instances when fresh ideas are needed to reinvigorate an organization that has static growth within its organization human resource wise if not market position. Succession plans that involve external selection may also have the aim of getting candidates with vast experience that could be of value to an organization. The experience would enable the new Chief Executive Officer to hit the ground running as soon as he assumes office. The vast experience could also translate to a wider contact base amongst the movers of the industry the organization belongs to. To illustrate: a well-experienced chief executive officer would bring with him his credentials and the goodwill attached to that name into the organization. This would add credibility to the organization including the benefits that come in knowing the right people or being associated with the right people. Bringing in an external chief executive officer can similarly bring in outside perspective that can be translated solutions. It has been said that being too close to the forest would result in a limited perceptive of the organization and its potential as well as a limited view of possible solutions to problems. An outside perspective with the correct experience and motivation to correct the problem may resolve issues that have long been preventing the organization from moving forward. While the downside of external selection includes the availability of the right candidate that could be negated by ensuring that the candidate is signed in by the organization as soon as he is available. This, however, will result in a situation that could become a problem area, most especially if the current chief executive is being fired for a reason. On another note, however, getting the candidate CEO, as another senior officer, may resolve both dilemmas. The solution could also negate the learning curve requirement needed by any new employee to come to speed with the organization’s culture, operation, financial and market position. As indicated previously, external candidate can bring in fresh ideas, however, not all fresh ideas are applicable or can be implemented at once without taking to consideration the unique culture of the organization into the mix. Personality clashes amongst the old executives that are resistant to the fresh ideas, since they do not jibe with their own perception of the organization’s culture, could be an end result. Another downside of getting an external CEO is the resistance of employees to follow or drive the initiative of the new CEO to its fruition because of their loyalty to the internal executives that should have been selected as the CEO as far as their perception is concerned. The acceptance of the external CEO by the employees may also take a while since the CEO will not only be scrutinized closely by the employees and other stake holders, but his past and decisions will be inspected and dissected if not questioned. Therefore, it is wise to ensure that in the CEO selection process, excess baggage of candidates should not be brought into the new organization. Conclusion The succession planning of any organization for its Chief Executive Officer should include a selection process that would take into consideration the following issues: attrition of good talents that were not selected or good midlevel to senior executives and the politicization of the selection process that would do more harm than good to the organization. The selection process or the succession planning should not have the aim of getting a super-CEO that will be able to solve all the problem of the organization in a single bound. There would always be challenges in getting the right CEO, however, these challenges can be overcome with the right kind of planning. Nobody is indispensable preparing for the eventuality of any CEO leaving the organization not only can enhance the survivability of the organization, but also reveal the weak areas in the organization (Bower). As well, succession planning helps the transition from the old leadership to the new leadership. References Aspatore Book Staff. The Role of a CEO: Strategies for Being a Successful Leader. New York: Aspatore Books, 2005. Print. Bower, Joseph L. The CEO within: Why Inside Outsiders are the Key to Succession Planning. Cambridge: Harvard Business School, 2007. Print. Carver, John and Miriam Carver. A Carver Policy Governance Guide, Adjecent Leadership Roles: CGO and CEO . New York: Jossey-Bass Publishing, 2009. Print. Read More