Overview of the case study
The report intends to concentrate on various leadership style and governance model by using examples of C-suite employees functioning different business operations. Following a case study which deals with different keys of business leadership, procedures of managing organisations based on industrial background will be discussed here. Further, leadership responsibility does not restrict itself between giving instructions and checking revenue. The success of this job role depends on their capability of monitoring performance and examining corporate direction. Audits will be necessary for managing risks and ensuring organisation’s compliance. The overall success of organisation depends on understanding different perspective of stakeholders and try to keep a balance with those. All these areas will be addressed and analysed in this report as a brief guideline for managing organisation by implementing effective leadership style.
As discussed in Charléty (2018), in order to understand the role of CEO within a company maintaining all the theoretical aspects of corporate governance is significant. Considering the case of former technological leader Siemens it can be said CEOs must be efficient not only in terms of governance but being ethical and maintaining the core value of organisation. The case study states that in the year 2006, after the news of record growth and revenue Siemens was identified as they offered bribe to Government officials which led to several arrests and detailed investigation (Charléty, 2018). The company faced huge penalty and had to invest the most reliable human resource expecting to regain lost pride and stakeholders’ trust.
It took two years to filter the entire system and structure. New CEO of Siemens decided to lead more strongly and focused more on corporate governance and employee behaviour to ensure maintenance of company’s ethical guidelines and mitigating risks (Tao & Hutchinson, 2013). While recovering workplace culture has been changed along with business strategy in order to keep the practices best in class. Therefore, apart from its efficient application of recovery procedure and operational strategies it can be said that this situation can occur in any organisation at any level. Acknowledging this issues, it can be said CEOs must not engage themselves into such practices and must take responsibility of preventing such unethical behaviour and practices (Visser & Tolhurst, 2017). They must be clean and unquestionable so that company can present themselves as epitome of trust in terms of serving stakeholders. By following this rule, according to the case Siemens was able to regain integrity among the employees and management.
As mentioned in the case study a degrading examples of bad behaviour has been found among the C-suite employees. In case of Siemens, CEOs violated both the company norms and ethical guidelines of business. As argued by Filatotchev and Nakajima (2014), aligning employee behaviour continuously with parameter of organisational value is a secret behind long term sustainability of business. It ensures both the financial and commercial success of organisation. Ethical considerations must come as every employee’s first consideration while executing responsibilities. As described in Puat Nelson and Devi (2013), there are guidelines and policies, organisational code of conduct, the manner executives and managers are using while dealing with stakeholders, management procedures and employee value in terms of their authenticity. These factors help to align with core values and increases acceptability among different stakeholders. These are some of the crucial factors which can help in mitigate potential risks.
Preventive measures taken by board of directors against unethical practices of CEOs
The various practices of corruption is termed as exploitation of corporate power of responsibility for personal benefit. Systematic corruption which means the involvement of company officials and powerful personalities into the corruption. In such cases, asking for help from correspondent legal framework, elimination of corrupted officials and detailed investigation can be the necessary primary measures. Although, as described in Ammann, Oesch and Schmid (2013), corporate governance does not only deal with ethics and code of conduct yet company policies, strict supervision and developing practices of sustainability refrain executives from committing such mistakes. Shareholders play a crucial role while recruiting people into managerial posts to keep the corporate structure undisturbed. Shareholders and investors create new board of directors and managers who are accountable to structure and maintain strategic goals and policies respectively. As described in Babalola, Stouten and Euwema (2016), the leadership ability must integrate all the employees and senior executives under them reducing the turnover intentions or unethical mentality. There are few corporate governance principals which are expected to restrict and reduce the unethical practices within business.
- Directors must be transparentas far as sharing all the information and decisions regarding business to investors and relevant stakeholders.
- Biased practices are not allowed while dealing with both the shareholders and stakeholders of organisation. Fairness in every business operation is required to ensure sustainability (Klettner, Clarke & Boersma, 2014).
- Honesty and integrity must be the ultimate motive while executing any task related to business as they are accountableto investors and shareholders for every decision they make. They have to be responsible enough to deliver results by deciding the best for their business.
Therefore, it can be stated that systematic corruption is a sign of poor governance. With the right application of this conduct both the social and economic goals can be achieved. In order to ensure ethical practice and developing the business as unbiased, profitable and a result of hard work board of directors are suggested to follow three central directions as follows.
- Effective structure and implementation of Policyas it determines responsibilities starting from the management level to D grade staff. Well written and well communicated policies are necessary for ensuring professional output (Tricker & Tricker, 2015). By conducting regular meetings members can evaluate situation and system. Occasional reviewing would help to understand flaws and take preventive measures for that.
- Decision makingis another crucial consideration regarding strategic dimensions like working towards vision, mission and core values. In terms of identifying unethical behaviour and taking necessary steps, decision making ability of senior management pays serious attention.
- According to Lin, Ma and Johnson (2016), continuous process of strict supervisionis important for recognising bad practices among CEOs. While recruiting management team shareholders must allow candidates of unquestionable character and make them accountable to maintain so during their stay within system.
The case study gives examples of crisis and states some of the strategic ways to deal with all those critical matters. In case of any discrepancy, CEO will be the ultimate one to become responsible for not concentrating on details. They have to balance business operations with governance procedure and yet have to ensure profitability and growth. A strong significance of corporate governance can be identified in terms of growth irrespective of the size of organisation. It suggests to adopt strategies of governance from early days of operation in order to ensure gradual and productive growth of business. Instead of focusing on revenue and profit if the company can think to invest on governance purpose then bigger dreams will take lesser time to be fulfilled. Achievements will be easy with addressing both the internal and external stakeholders’ perspective and making the investors aware of detailing of monetary transactions. In a backdrop of current economic crisis, it has been noticed that people entrepreneurs’ mentality has become profit oriented and they have grown a tendency of ignoring stakeholders’ perspectives. Therefore, to regain the trust companies must work on their governance regulation until media reports creates sensation regarding such governance issue. Secondly, the market has been changing rapidly so business leaders are consistently facing difficulty to keep up with those. As the CEO is highly responsible before every stakeholder in case of any mishap, the high performance and leadership qualities will aptly solve issues with corporate governance or stop being indulgent to such unethical practices.
As addressed by Lien and Li (2013), a distinct relationship can be found between various styles of leadership and a dynamic corporate governance framework which can able to function effectively and add value to business operation. It is an influencing mechanism used by board members to implement the policies into organisational practices and managing job responsibilities within governance infrastructure. This model can be adapted for satisfying specific business needs. This business model revolves around successful execution of following components. 1) Organisation structure and interdependencies of employees and management, 2) capability of over sighting responsibilities of managing various sectors related to recruitment and retention, ensuring personal and employee accountability and many more, 3) Establishing a good culture of mutual assistance by sharing knowledge throughout the workplace and 4) infrastructure as mentioned before. Infrastructure deals with policies, managerial process, IT and communicative support. Success of this model depends on effective leadership qualities which has direct impact on employee behaviour. It has been proven as stated in Kacmar et al. (2013), that transactional and transformational leadership style likely to lead towards an improved corporate governance outcome by implanting theories diplomatically.
Leadership qualities of a high performing CEO
To talk about leadership orientation of a CEO is not someone who used to be high performing in business school but a personality who has all round knowledge of business. A high performing leader must acquire knowledge and experience in every facet of business irrespective of industrial background. Therefore, they must know operational detail of every department and ensures integrity and coordination among different sectors of business operation. Hence, few character attributes of well performing leaders have been described as follows.
- Capability of making effective decisionsdetermines their high performance. Leaders have ability to state their views and motivate others to follow that. They ensures best output as they are accountable in front of stakeholders. Clear and strategic decisions able to accomplish goals and help to maintain governance policies as well.
- As mentioned before, executives have overall understanding of industrial details. Stakeholders are meant to be satisfied by leaders’ understanding of industry operations and channelizing the monetary resources and its proper execution creating value for relevant customers. Their ability of perceiving market trends is different from a non-professional. Therefore, they have ability to take better decisions related to investment and launching company products.
- Maintenance of an ethical and transparent relationshipthroughout the dealings.
This is how, a high performing CEO should be leading an organisation towards accomplishment of organisational objectives.
As discussed in Zhu et al. (2014), CEOs to ensure ethical practice and prevent the codes of conduct from violation consistently seek for establishing loyal relationship with employees working under leaders. In order to achieve the desired outcome leaders might work on developing organisational climate, effective team and community management. According to Ewoh (2013), managing a diverse culture and effectively working on organisational change managers can satisfy both the business and employees’ interest.
Providing a good work atmosphere includes flexibility in working hours by balancing private life with workload (Karatepe, 2013). It depends on leaders and his/her understanding of employees’ ability to deliver a level of work within a stipulated time. An environment must be made where teamwork has more priority than working on individual dependence. Sharing knowledge between managers and employees or among employees will be effective as far as providing assistance to employees is concerned. Effective communication is the ultimate key to develop a helpful culture. Increase of social communication by social media or groups will increase connections between them which will reflect on their performance. According to Guillon and Cezanne (2014), motivational sessions will be helpful and if employees are well aware of the company policy, code of conduct and legal boundaries; it expected that they would refrain themselves from unethical practices and devote loyalty towards organisational objectives.
As discussed in Cooper, Gulen and Rau (2016), employee loyalty can be increased by recognising workers’ effort, providing benefits and rewards as per performance. As CEOs have to manage the employees and business operation efficiently, companies tend to keep a huge gap between executive’s remuneration and a C-suite employee or CEO. It will create less trouble if the remuneration and benefits are decided in terms of performance. In case the firms could not perform in a situation of weak benchmarking there would be no difference in a CEO’s pay scale. Therefore, issue is compensation and salary policy is both a problem and motivational factor. It must be tailored according to company’s business condition and incentives must be aligned with performance. Therefore, lack of governance in remuneration policy creates confusion and increases company expenses. To mitigate this issue performance based incentives will make the employees feel valued and worthy for business.
Among all these complications, as it can be identified after reading Liu and McConnell (2013), media has to add some more pressure as they consistently follow business organisations in search of internal flaw. While recruitment it would be appropriate to evaluate CEOs competence as far as both the stability and crisis management are concerned. They are expected to take effective actions even if the company is facing worst kind of crisis. With the help of technology the work has been easier for them at least for collecting feedback and responses from relevant stakeholders. Employees need to be provided with several training in case any business shifting their procedure taking the leverage of technology. A large part of human resource seeks for assistance when it comes to managing the change. Leaders are expected to increase communication, provide them with necessary training and allocating new responsibilities maintain the old ethical boundary and managerial guidance.
Dealing with human resource does not mean they are allocated to take instructions only. Managing employees is equivalent to managing different emotions and personalities as well. In order to handle exclusive natures and at the same time ensuring productivity a leader must create an atmosphere of care and assistance. According to Vangen and Winchester (2014), it will boost the production as the doubts are solved with floor support. In order to guarantee better performance from a culturally diverse workforce and to avoid conflict among and with them employee loyalty must be increased again. Communication must be increased through all modes to overcome language barriers and misunderstanding.
Conclusion
The conclusion can be drawn by saying that as described in Siemens case study, sudden occurrence of ethical issues are results of prolonged ignorance in areas of supervision. Employee performance must be monitored and CEO needs to be of unquestionable character to hold such a higher and respectable position. Evaluation of policies and procedures would be helpful in terms of measuring corporate direction and infrastructure of its governance policies. Such risks are common in a business scenario, yet at any level of organisation it is not possible to indulge or tolerate such unethical practices of bribery. To manage such risks policies must be strict enough and so is the supervision procedure for ensuring compliance and integrity within entire business organisation.
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