Changing Roles of the Chief Executive Officer in Present Corporate Cultures
Introduction
In recent years, the role of the Chief Executive Officer (CEO) has changed from a higher level manager generally inaccessible to employees in position of lower-level managers and as low as entry level. The CEO in today’s cultural environment steps into activities intended to increase moral, improve productivity, and evaluate potential problems previously beyond the scope of his traditional responsibilities. Particularly in cases involving the media, the CEO represents the face of the company. News briefings handled in an inefficient manner hold the potential for loss of credibility by the corporation, financial repercussions in terms of sales and stock prices, and potentially incrimination legally. The paper addresses the changing role of the CEO in present organizational culture, presenting empirical and theoretical evidence for the findings.
Changing Roles of the Chief Executive Officer in Present Corporate Cultures
The days of the Chief Executive Officer (CEO) sitting in an office apart from the day-to-day operations of the company have come to an end. In a society of multimedia interaction, the CEO is the face of the company and as such, becomes involved with employees on all levels. Contemporary managers understand the corporate culture of the workplace and the best way to do so is to interact with the employees personally while gauging opinions and gathering input. They use the information by incorporating it into decisions. By encouraging debate, the CEO not only understands the mind-set of lower-level staff, he can effect conceptions with explanations and refine his own relationship to the issues.
Within a small company, a CEO has the ability to personally communicate with each employee much easier than a CEO of a major conglomerate. However, any office worker tells of an occasion when the top executive of the company came through for meetings and walked through the facility. Company newsletters with inclusions from the office of the CEO carry information and address concerns applicable to everyone in the organization. Mass emails accomplish the same goals and can be individualized to specific departments. In other words, there are many ways a CEO can influence the corporate culture of the company without personally addressing each individual.
As an example, in an effort to reach 60,000 employees in Italy with information concerning an upcoming transformation, the CEO of a bank traveled throughout the country to gather input and create an understanding of the pending process. “It’s a long process, but you have to put your face in front of the people if you want them to follow you. “ (Harrison 2005-2013, pg 1).
When a topic becomes so important the media takes interest, the CEO steps in as an authorized representative to dispense information accurately. He affects the corporate culture in a different manner in the he deals with events employees view as detrimental to their livelihood. The facts and details he distributes impacts the company on every level. Financial reports may show a change either up or down, depending on the type of news released. The credibility of the business comes under scrutiny. Possible layoffs are a consideration in some circumstances, with an accompanying impact on morale. In some instances, the information released by the CEO determines the direction of legal action.
A company in the news affects the attitude of its employees. They will wonder if their jobs are secure and future raises at risk. Scandal lowers the pride an employee feels when his employer is under scrutiny. Possibly, the public makes the generalization that problems with a company indicate problems with the people working for it. It is the responsibility of the CEO to coordinate efforts to stem the flow of misinformation and reassure the parties involved that the situation is under control.
Damage Control
After a damaging incident is reported, the CEO is one of upper-level managers responsible for engaging associates in discussions for lessening the feelings of ill-will. Positive rather than negative reinforcement is more effective (Harrison, pg 1). If the event is newsworthy and appears in the media, it is imperative actions be taken under the supervision of the companies top executive to address communications. Seeing the CEO among employees, talking individually or in small groups, particularly when there is significant financial or even perceived value is at stake, has no substitution. When successful events occur or there is recognized recovery from the event, the CEO celebrates with the employees in a similar manner.
Corporate Scandal Example
An example of a corporate scandal demanding the CEO attempt resolution of the situation for a situation not of his making is the failure of the Texaco oil corporation in 1987. CEO John McKinley was attempting to revive the floundering company when Texaco offered Getty Oil $10.1 billion for acquisition. However, Penzoil Corporation stated it had already reached an agreement with Getty Oil for acquisition and sued Texaco. The company asked for $15 billion in damages; Penzoil later settled for $3 billion. With assets totaling $34.9 billion, Texaco filed for bankruptcy in 1987. McKinley retired one year prior.
Chevron Corporation acquired Texaco in 2001. They released a statement declaring John McKinley addressed the operational capacities of Texaco and strengthened them. Although his attempt to expand the asset base of the company resulted in corporate bankruptcy, Chevron believes his actions continue to improve the company today. John McKinley died at the age of ninety-four in June 2014 (“CEO who bankrupted Texaco dead at 94”, 2014).
Despite the actions by Penzoil blocking the acquisition attempt by Texaco under the guidance of McKinley, Texaco continued to operate another three years and to accumulate assets. In-depth analysis of the business transactions during that time which lead to the decision to file bankruptcy are unavailable, but the state of the company then is an example of a crisis situation.
The Texaco Crisis in 2014
As previously stated, Chevron acquired Texaco fourteen years after the company filed bankruptcy. If Texaco operated in 2014, McKinley would face a different role. He would be expected to address the media in a press release, explaining to the public in layman’s terms the situation of the company. A poor image by the public results in loss of revenue through decreased sales of products and lowered stock prices. McKinley would seek the advice of media consultants and members of his own staff as how to compose his responses to questions by reporters.
More importantly, McKinley would place himself visibly in the factories and offices to generate feelings of stability and reassurance to Texaco’s employees. A factory worker considers changing employers if he believes he may be unemployed soon. Also, McKinley would contact as many franchise owners as possible through telephone, email, and text to personally reassure them of the future of their businesses. Even in 1986, this would be a formidable task. McKinley would utilize his senior managers to create the lists and messages needed and authorize them to send them in his name.
It is not known the actions John McKinley performed in 1984 to bolster the confidence in Texaco by employees and partners, but the company remained in operation for another three years.
Crisis Management
When a company experiences a crisis, the CEO shows how working with employees under his influences makes a difference in continued operation. Savvy contemporary companies understand the possibility of a crisis occurring at any time. For that reason, the CEO works with his resources to put a plan in place in anticipation of an event. He doesn’t know what that crisis may be, so he creates a number of plans. By having a utilization plan ready for implementation, a crisis presents less of a threat. The CEO has the ability to put the strategies into effect, confident that he will not be acting emotionally or impulsively. Without a crisis plan, the CEO makes mistakes possibly fatal for the continued operation of the company (Coombs, 2004).
A competent CEO recognizes early signs of a crisis, either from evaluations, conversations, or during planning for potential events. If it cannot be prevented, he encouraged employees to work together through the crisis. From the onset of the crisis, the CEO shows confidence that resolution of the situation is attainable. Managers are informed of every detail. This prevents an individual from needing to fumble his way through a situation. By working more closely with employees in a time of crisis, the CEO promotes effective communication. He prompts all employees to trust one another to avoid negativity eroding the morale of the workplace. Once it is clear the organization survived the crisis, the CEO and managers discuss with the employees the lessons learned and how to avoid making them in the future (“Role of Leaders / Managers in Crisis Management” 2014).
Another way the present-day CEO differs from earlier ones involves the awareness of crisis communications. These are a sub-category of public relations designed to protect a company facing possible lessening in the eye of the general public. Initially, a crisis communication plan recommends issuing a press release stating the company is aware of the problem and steps are in place to address it. A communications staff consults the crisis plan previously prepared, makes any alterations necesssary, and presents it to the CEO for approval. The communications staff remains constantly vigilant for additional changes needed and the CEO puts the approved messages into effect (Barrera 2014).
Conclusion
The role of a Chief Executive Officer is not the same as in decades previously. The CEO of a company is responsible for the operation and success of his company, using available resources for times of success and times of crisis. Unlike in previous years, the CEO anticipates opportunities to walk through offices and factories, contacting employees on every level of operation. When the company is seen in financial straits by the employees, they are comforted by the actions of the CEO and when they are allowed input they support their employer by high morale and efficient job performance. In the corporate culture of today, the relationship between an employee on any level is much closer to the CEO in the past. The Chief Executive Officer utilizes the enhanced relationship to increase morale, productivity, and improved communication.
References
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