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Where Experts Get It Wrong

The document differentiates between the roles of a board of directors and a CEO. The board is responsible for establishing the company's vision, values, and strategy, and ensuring interests of shareholders and stakeholders are met. A CEO manages day-to-day operations and carries out the board's vision. Leadership creates vision and transforms an organization, while management plans, organizes, and ensures processes are followed. To be effective, board members require strong leadership traits like extroversion and conscientiousness. Having a CEO on the board is not as important as whether they display leadership capabilities through traits like good judgment that benefit the organization.

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Chahnaz Kobeissi
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44 views

Where Experts Get It Wrong

The document differentiates between the roles of a board of directors and a CEO. The board is responsible for establishing the company's vision, values, and strategy, and ensuring interests of shareholders and stakeholders are met. A CEO manages day-to-day operations and carries out the board's vision. Leadership creates vision and transforms an organization, while management plans, organizes, and ensures processes are followed. To be effective, board members require strong leadership traits like extroversion and conscientiousness. Having a CEO on the board is not as important as whether they display leadership capabilities through traits like good judgment that benefit the organization.

Uploaded by

Chahnaz Kobeissi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Where experts get it wrong: independence VS leadership in

corporate governance

First it is important to differentiate between the roles and duties of the board of directors and

the CEO. The Board of director key purpose is to make sure that the company prosperity is

attained through directing the companys affairs, whilst meeting of the interests of both the

shareholders and stakeholders. As well as it must deal with the challenges and issues related

to corporate governance, corporate social responsibility and corporate ethics .BOD role is to

establish the companies vision, mission and values in order to set a guide and set the place

for its current operations and future development. Through determining the value of the

company they set the tone on the top that is the way they want to promote in the company

and reviewing the company goals and its policies. Moreover, they are responsible in setting

the strategy and structure through reviewing present and future opportunities, threats and

risks .Determine the business strategies and plans that underpin the corporate strategy .They

should exercise accountability to shareholders and be responsible to relevant stakeholders

through effective communication between them and promoting the goodwill and support of

shareholders and relevant stakeholders. Finally Directors must act in good faith in what they

honestly believe to be the best interests of the company, and not for any collateral purpose.

This means that, particularly in the event of a conflict of interest between the company's

interests and their own, the directors must always favor the company. On the other hand the

role of CEO include determining the board composition and organization ,clarifying the
board and management responsibilities , planning and managing board committee meetings

and developing the effectiveness of the board .

Now lets differentiate between and a leader and a manger. Leadership is creating the vision

for others to follow ,establishing corporate values , and transforming he way the

organizations does business . Leaders determine the direction , vision ,mission and the future

in other words leaders do the right things .Its primary function is to produce to change and

movement , envision , align employees ,change , long-term , motivating . They focus on the

ends, what gets things done, and achieves organizational goals and organizational goals.

Finally they are outcome oriented and thus holds accountable for their work. Based on the

big five personality traits being highly extrovert, conscientiousness, openness to experience

is positively correlated to leadership. On the other hand management is the carrying of the

leaders vision through planning, organizing, directing, controlling, leading, coordinating.

They follow directions, do things right, follow orders and stability. They are more concerned

on the process hence they favor responsibility over accountability.

Based on the above information we can say that in order to be a member of the board of

director it is important to score high on leadership, hence in order to carry out the

responsibilities of the BOD it is members should have the characteristics and traits of a

leader in order to excel. Because the members of the BOD must influence its followers, cares

about the organization reputation and promote its goodwill. On the other hand being CEO

also requires having some leaders characteristic, but it is not as highly important for the

members of the BOD. The CEO may function with minimal leadership characteristics and

traits but is not the case for a member of BOD without high leadership capabilities they will

fail to function properly. Since scoring high on extroversions, conscientiousness,


agreeableness, openness to experience is positively related to being a good manager and thus

is capable of having or developing its leadership capabilities , but failing to have to have or

not high highly scoring on the big five trais minimal the possibilities of a person to function

as a leader .Thus having a CEO on the board or not is not the question, since according to

many researches they find it to be irrelevant in determining organizations performance.

Rather the question that should be asked on whether a CEO should be part of the BOD or not

is does a CEO has leadership capabilities? That is what happened in Walt Disney when they

decided to appoint Robert Iger as CEO and to hold a place on the BOD because they found

that he has the leadership capabilities and exhibit good judgment and grace under fire which

was not the case for Michael Eisner. Therefore, personality is what matters and in this case

leader personality traits are what a person should be evaluated on in order to decide on

whether to include to involve a CEO on the board of directors.

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