Critical Perspective on Leadership in Contemporary Business Environment

Running head: CRITICAL PERSPECTIVE ON LEADERSHIP
CRITICAL PERSPECTIVE ON LEADERSHIP
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CRITICAL PERSPECTIVE ON LEADERSHIP
Introduction
Leadership in the contemporary world, in the context of business, demands a completely
new set of skills and potentials that was not required some decades ago. Business leaders can no
longer depend on just the financial success to ensure sustainability of the organization they run.
The essay aims to analyze critically the role of business leaders today and the steps they need to
take to ensure overall success of the organization.
The current business environment is facing turbulence owing to the numerous changes
that have taken and are taking place in the world. The globalization phenomenon that began
dictating the way businesses should be done, posed new challenges for the organizations. It
meant that these organizations now have to deal with not just finance but also cultural
integration. Apart from globalization, the terrorist attacks in different parts of the world have also
changed the dynamics of business. To tackle these issues, organizations lay increased emphasis
on the decision-making process and the leaders take on the responsibility to bring about positive
change. The success of the leader is now measured not just by the financial metrics but also by
his or her performance on environmental, social and governance (ESG) issues.
The essay will discuss the ways to evaluate success of the CEOs, the challenges faced
when focusing just on financial metrics and challenges faced by leaders to balance financial and
ESG metrics. In doing so, the essay will provide both theoretical and practical analyses of the
leaders.
Discussion
The Scientific Management theory, proposed by Frederick Taylor back in the 1900s
demonstrates the meaning of success focusing only on profit. As per his theory, CEOs need to

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equally divide work amongst their employees and utilize monetary incentives as a way to lure
them. The workers, according to this theory, are like lab rats that would perform to achieve the
cheese. The evaluation of success of a CEO based on financial metrics indicates affinity to this
theory. In today’s world however, following this notion often leads to disastrous results.
As Zacharias et al. (2015) observe, a CEO holds key to creating an organization that
contributes to the entire society and thus, evaluating his or her success on the parameters of
finance only would not even be considered success.
Jack Ma, the cofounder and executive chairperson of the giant multinational technology
company Alibaba based in China, presents a good example of CEOs heavily focused on financial
success. With humble beginnings as an English translator, Ma went on to become one of the
most powerful business leaders of the century. He asserts a kind of leadership that could aligned
to military leadership because of the strict discipline with which he leads the business. Prior to
founding the company, Ma was rejected for job at KFC and in various other companies but he
did not give up. The sheer passion with which Ma continued his struggle led to the formation of
Alibaba. Under his leadership, the company became one of the top ten highest earning
companies in the world. The current market capitalization of Alibaba is around 460 billion
dollars as listed in the New York Stock Exchange, which shows the kind of success Ma had
brought to his company. However, it is evident that the success of the organization is measured
mostly by its financial achievements. The strategies used by Jack Ma to ensure the company
retains its top position within the Chinese market did not align with any of the ESG strategies.
The organization was ranked 48 in the list of top companies with highest ESG ratings. It shows
that the leader’s prime focus was financial success. In terms of governance, which is the third
and crucial element of ESG, the Alibaba group under Jack Ma presents high risk to public

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shareholders. This is largely due to the lack of independent board representation and shareholder
rights. Ma has been involved in controlling various units of the company without informing other
shareholders of Alibaba. The CSR rating of the company has declined and stayed low as well
over the years. During the period of 2016 to 2018, the ratings did not even touch cross the 50-
point mark. These facts reveal that success cannot be defined only through financial metrics, but
all factors have to be considered. Alibaba Company caters well to the needs of its customers but
it must give equal importance to other elements such as the shareholders.
It is evident from the above discussion that success cannot be defined merely in terms of
financial success but also must include other factors such as the environment, social and
governance (ESG). As Rezaee, Zhen and Ha (2017) put it, “the dimensions of sustainability
including economic, governance, social, ethical and environmental, collectively play an
important role in the overall long-term success of business organizations”. The authors are not
wrong in stating this because the Corporate Social Responsibility (CSR) trend today is one of the
most significant aspects of any business. Success thus should be defined from the perspective of
the shareholders, the stakeholders, the environmental and social factors.
Success of an organization especially in the contemporary competitive world is depended on
numerous variables. Strong financial performance is one of the most important parameters of
success for businesses but focusing on just this aspect makes it challenging organizations to
sustain.
Kim et al. (2016) are of the view that organizations should focus on financial
performance because it is the most fundamental aspect of any business. They argue that
organizations cannot address ESG issues without a strong financial base and hence, it has to be