Dual Leadership in UK organizations Essay Example | Topics and Well Written Essays - 1500 words

Dual Leadership in UK organizations - Essay Example The dynamics of the CEO-Chairman interrelationship and the effects of this on the enterprise have been studied by Kakabadse et al (2006) who adopted a qualitative methodology and provided in-depth interviews of chairmen, CEOs and non-executive directors. The chairman-CEO interactions and their effects were also studied and the findings of the paper have been based on the chairman's role and contribution, nature of the relationship between the chairman and CEO, the attributes or traits of an effective chairman and the impact of the chairman-CEO relationship on board effectiveness (Kakadabse et al, 2006). The study provides a clearer picture of the chairman-CEO dyad and the influence of the dyadic interaction on the formative context of the enterprise. Using data from 2180 Chairmanships from 460 UK firms over a period of 8 years, Florou (2005) suggested that there is a link between the Chairman and CEO in many ways as when a CEO is dismissed, the Chairman is also replaced. The data on dismissal events also suggest that replacement of a Chairman is associated with restructuring of the board and with restructuring, new skills are brought in which might facilitate future corporate decisions. However Florou (2005) claims that the Chairman's previous position does not affect the Chairman removal or the CEO dismissal process although if the Chairman has been responsible for the appointment of the failing CEO, during CEO departure, the dismissal of the Chairman is also likely because they tend to work as a team and one's failure mirrors the other's failure as well. This in turn would suggest effective governance within an enterprise. Sora et al (2004) discuss some resultant problems when the role of the chief executive officer and role of the chairman are merged and when person takes up both the roles. There are controversies to this sort of responsibility as when the responsibilities of the CEO and Chairman are given to one person, there can be a decrease of vigilance and flaws in accountability and operations of the company. As the power for the company centers around one leader, the CEO/Chairman can use this power for his personal gain at the expense of other stakeholders in the company (Sora te al, 2004). Thus a unitary leadership structure with no distribution of power can lead to an environment of greed and corruption resulting in mistrust towards the company and its people. This suggests that the regulation of leadership and distribution of power should be done considering the benefits to the company and the credibility that the company can gain with it governance and management structure. There have been several pressures on US companies to separate the roles of CEO and Chairman because a unitary leadership can lead to too much power given to one person. Shareholder activists and regulators maintain that US firms should separate the titles of CEO and Chairman of the Board as separate titles could reduce agency costs in corporation and improve performance. According to shareholders and regulators, separation of the role of CEO and Chairman has potential costs and benefits and Brickley et al (1997) suggest that costs of such separation would be larger than benefits for most firms. So how can the one man show or unitary leadership