Building Employee Loyalty in Organizations

This assignment examines key elements that influence employee loyalty within organizations. It delves into concepts such as corporate climate, organizational community, teamwork dynamics, diversity, flexibility, and the impact of organizational culture on fostering loyalty. The analysis highlights how a CEO's actions and strategies can shape these factors to promote a positive and supportive work environment that encourages employee commitment.

Running head: LEADERSHIP AND GOVERNANCE
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Leadership
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Institution:
Date:

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Ways by which the Board of Governance will prevent unethical behavior in the CEO
The challenges that a company faces in the present times for a lot of leadership of companies
that has made a lot of management and boards decisions to stand out. Abraham Lincoln once
said that nearly all men can in one way stand adversity; however, if you want to test a man’s
character he should be tested with power. This is a clear picture on what the CEO s position
can bring out of a man. The CEO position should be the very important where every decision
of the company can be exemplified through this position.. a vital position where transparency,
accountability and integrity should be of most importance in the context of governance of a
company(Schein & Schein, n.d.).
The image of the company’s chief executive can run into deep and heated waters when media
security fast picks up a story on compensation or any other crisis in a company that has been
mishandled by the CEO and blown out of proportion. This is done in difficult times of the
company and the current environment. The CEOs effectiveness and leadership qualities are
shown in time of crisis like in this case. The best case examples for this are the BP case study
that showed how media scrutiny and CEOs effectiveness can be affected and the second case
is the Siemens Case of accountability and the limits that the Chief Executive has(Ybema,
Yanow & Sabelis, 2011).
However, the board of governance can do a lot to prevent bad and unethical practices and
behaviors that can be brought by the CEO. Every company requires good governance and
corporate management. Regardless of how big or small company is, corporate governance is
important in ensuring ethical and professional practices.

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Corporate governance measures and effective policy decisions should be every board of
governance top agenda besides making strategic decisions. It is important for the board of
governance to have the best corporate governance policies that are the reference point for dos
and don’ts of the Chief Executive of the company.
The other way in which the board of governance can prevent bad behavior is by ensuring that
the CEO is well compensated. In many cases for example the Siemens case, accountability
was the main issue. CEOs should be compensated well to ensure that they do not engage in
fraudulent activities and bad behavior that may lead to a tarnish of the image of the company.
The board determines the compensation in most cases of thee Chief executive, in many
companies, they are paid the highest with some going to hundreds of millions annual
compensation which includes salaries, bonuses and employees share benefit plans if any. This
makes the CEO committed and loyal to the work that he has been given(Alvesson &
Sveningsson, 2016). There is no right level of compensation of compensation according to
Fabiani but there is the appropriate level of compensation.
The third point in board of governance decision to ensure that there is high integrity that
enables sustainable yet long term performance of a company. Ensuring integrity ensure that
the CEO is accountable for every decision he makes and that the company will face media
scrutiny if the decisions are not good. Media scrutiny dents the image of the company and
will affect negatively the performance(Schabracq, 2007).
The board of governance should also set the performance criteria of any organization
spearheaded by the CEO. For the company to have good business acumen, the board of
governance must have the best leadership qualities who know the visions and mission of the

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company. In enumerating the company’s vision and mission, the board of governance should
hire the best CEO who strategically understands where the company wants to see itself in
short and long term. Performance targets should also not be too stretching that they make the
CEO and the management engage in fraudulent and unethical behavior to meet them. Lastly,
the leadership is a quality that every CEO should have to direct the company to greater
heights and ensure top heavy regulations of the company.
How a CEO should lead by example
For good corporate governance, the people must be considered. Good corporate governance
is about the people in all level that is the board, management, staff, customers and
shareholder. The CEO as the focal point of a ticking company should have be the natural
born leader who initiates the company commitment to give the best. A good CEO should by
all means lead by example. The behavior of the company is synonymous to the character of
the CEO. An example will forever be given of Kenneth Lay of Enron and Tony Hayward of
BP due to the collapse of Enron and oil spill to the gulf of Mexico for BP.
It is right to hold all the responsibilities to the shoulders of one man at the helm since he
bares the greatest responsibility for the company. Some people argue that a good CEO can
compensate for a bad board decisions but a good board can never compensate for a bad CEO.
So the leadership of the CEO should be scrutinized and interrogated for the best decision.
Siemens was dogged by many allegation of bribery which had tarnished its name beyond
repair. However, one man took over and the effect was largely felt. Peter Solsmenn had
worked as a senior manager for GE, but when he was hired to held Siemens a committee was
talking all the decisions and accountability was least. Peter changed all this because at GE the

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man at the helm, CEO, took all the decision(Schabracq, 2007). It was clear that lack of
accountability was driven by many people making the decisions. Peter changed all this where
he made all the decisions and ensured that Siemens public image was salvaged. Peter once
said that some of the decisions must outright be made by the CEO.
CEOs can never relax and are at all times the leaders and role models to lead by examples
especially in times of crisis.
In leading by example, the CEO must be transparent and all the decision made public to
avoid a lot of questions as to why he did that. He will be asked to account for many decisions
that were made. The answers presented must be transparent to simultaneously balance to
objectives of the company. The first objective is to deliver a very consistent and uniform
message as to why a company made its decisions. The second objective is to deliver a
message on what the company does to any person with questions.
By leading the company, the CEO must leverage on the importance of the employees and
their loyalty. The general feeling of any employee of a company is to feel wanted and
respected and will give maximum output. If a CEO can do that they will get the best output
and will hence make the best out of the employees. Good compensation to employees and the
CEO is also part of the company strategy if they have to show loyalty to the
company(Schabracq, 2007).
A CEO should also set limits for the company to achieve. The employees should note
allowed to behave as they will. Stern warnings and actions like suspensions and sacking. Top
companies in the world have different ways of dealing with employees in behavioral terms.
Some set the rules of engagements on policy issues like expenses and gift policies. It is the

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role of the chief executive to say this are the rules and they must be followed. The behavior
of the employees help set the behavior of the society as they integrate with other members of
the society. However, a directionless CEO will not know how to set the rules to the
employees and the steps taken to improve the general engagement with the employees.
There are various theories of leadership that may be employed by various CEO. The first
theory is Authoritarian or dictatorial theory of leadership. In this theory, the CEOs word is
final. His word is law and he makes all the decisions in the organization. This has its pros and
cons in that there are no question that may derail . it is also called the great man theory.
The second theory is the participative theory. This one, the leader allows everyone to
participate in leadership and decision making in an organization. Here the employees feel
great to contribute and will sometimes give their all in the company due to their sense of
belonging attitude. Its con however is that it may take time for a group to decide before
making a decision. It requires dialogue and communication before anyone takes a major
decision. Other forms of leadership theory include transformational theory, contingency
theories, transactional theories, participative leadership, behavioral theories and trait
theories(Ashkanasy, Wilderom & Peterson, 2013).
Leverage of employee’s loyalty by the CEO
Loyalty is everything. Loyalty gives someone a sense of purpose and a sense of belonging.
When an employee is loyal to the company, he tends to give extra thus benefiting the
company. Loyalty however can be inculcated through the following
Organization climate

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A CEO must make the climate conducive for employees to enjoy their work. It is the
business environment of an organization that is observed by the staff and greatly influences
the performance and actions of the staff. It is also known as the corporate climate. A CEO
may conduct surveys within the organization in order to promote the aspects that enhance a
good corporate climate leading to a good job performance.
Organizational community
Like any other community, organizational community is a set up that makes the organization
and the people that make it. For example, in a community the head is the community leader,
in an organization the head is the CEO. The management and the staff form the remaining
part of the organization community. A good CEO will create a good community in order to
enhance loyalty(Driskill & Brenton, 2011).
Teamwork
An organization is a team. A good team forms a very formidable workplace. Many
organization work in teams as teams lead to integration, create synergies and effectiveness
within the organization. CEO of a company will ensure that there are strong teams that drive
the agenda of the organization which includes the vision and the mission of a company to the
desired levels. Loyalty is enhanced through team building and building of strong
teams(Ashkanasy, Wilderom & Peterson, 2013).
Diversity
Every employee brings a unique and strong character in an organization and that is the sole
reason for hiring them. There are different departments within the organization and
employees bring in different set of skills to the departments. Diversity in personality and
skills creates what the company wants. A CEO should also reward individual skills that are

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diversified. Cultural diversity and personal traits also lead to different diversity within the
organization and are therefore rewarded by the CEO(Mallin, 2016).
Flexibility
This is the process of blending easily within the organization without hardships or with ease.
Many companies demand flexibility from their employees either in their time of work, skills
and many other valuable traits that may help the organization. For there to be flexibility, an
employee may be required to perform different tasks which are different from the common or
usual function. An IT guy may be told to step in the environmental department for a little
training in the field. This enhances employee loyalty especially if it is driven the he
company’s CEO.
Organizational culture
These are the values, principles and beliefs that govern the organization community. It
represents such factors such as the product that the organization is producing, the history of
the organization, the market, the type of employees employed, the strategy by the
organization, the management style and the vision of the company. The collective values of
the company should be the factors that a CEO should put in place for loyalty(Alvesson, n.d.).

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References
Alvesson, M., & Sveningsson, S. (2016). Changing organizational culture. London (GB):
Routledge Taylor & Francis Group.
Alvesson, M. Organizational culture.
Ashkanasy, N., Wilderom, C., & Peterson, M. (2013). The handbook of organizational
culture and climate. Thousand Oaks: SAGE.
Driskill, G., & Brenton, A. (2011). Organizational culture in action. Los Angeles: SAGE.
Mallin, C. (2016). Corporate governance. Oxford: Oxford University Press.
Schabracq, M. (2007). Changing organizational culture. Chichester, England: John Wiley &
Sons.
Schein, E., & Schein, P. Organizational culture and leadership.
Ybema, S., Yanow, D., & Sabelis, I. (2011). Organizational culture. Cheltenham, UK:
Edward Elgar Pub.