How Much Power Do CEOs Really Possess? An Analysis of Perspectives

This essay delves into the powers of Chief Executive Officers (CEOs), exploring the extent of their authority from both academic and practitioner perspectives. It examines the academic view, which suggests CEOs have significant power in day-to-day operations and decision-making, including setting company policies and micromanagement. The essay contrasts this with the practitioner perspective, highlighting the importance of organizational behavior and the limitations imposed by the board of directors, especially in critical financial matters. The essay uses organizational examples, such as Coca-Cola, to illustrate how CEOs utilize their power to address complex issues and adapt strategies based on situational exigencies. The conclusion emphasizes that the actual extent of a CEO's power is situational, influenced by both academic theories and practical realities, and that CEOs must balance their authority with the interests of the company and its stakeholders.

INTRODUCTION
A chief executive officer (CEO) is the uppermost ranking supervisor of an organization
whose main task is to take crucial business decisions, supervising the general manoeuvres,
functions and capital of the corporation and behaving as the chief point of contact between
the board of directors and corporate operational sections. Their role differs from company to
company depending upon the size and overall structure of the organisation.
The CEO is construed to be one of the most popular positions and at the same time least
comprehended job as generally there is a notion within people that a CEO has the power to
do whatever he/she wishes to, have all the powers in this world, and are automatically
proficient. Thus by its nature, the work of a CEO is very wide, covering and addressing to the
requirements of employees, customers, investors and the legal side as well. Thus due to the
vast arena of work, their powers are also huge. CEO’s are not the owners of the company,
they are also employees only, thus even though they possess vast powers yet their powers
seem to be limited at some instances. The said debate would discuss about what powers do
the CEOs actually possess and how much are fiduciary by nature as they also are ultimately
the employees of the company reporting to the board of directors and the promoters of the
company.
POWERS THAT CEO ACTUALLY POSSESS- ACADEMIC PERSPECTIVE
It is believed that although the CEO reports to the board of directors of the company, yet he is
the one who is deeply involved into the day to day operations of the company, thereby has the
power to take adequate decisions in the best of the interest of the company internally and to
some extent, externally as well depending upon the power delegated to him by the board.
CEOs do not possess the power to state policies on behalf of the company, but definitely has
the power to make decisions which would aid towards confirming to the policies spelt out by
the board, thereby confirming that CEO does possess huge amount of powers else it would be
difficult to go back to the board for each decision it takes.
Thus their powers are basically related towards making crucial decisions regarding the
operational functions of the entity and set the company policies. Thus until and unless the
company does not face any kind of a critical issue which may have an impact over its
stability, the CEO has been empowered with the rights to make decisions as he thinks is the

best. Hence it can be rightly said that CEOs basically possess the powers to micromanage the
entity (Sherman, 2018).
For the public, the CEO is the face of the company and therefore he has the power to cater to
these as per convenience and needs. Further the CEOs are expected to possess ownership
powers which mount up to those CEOs only who preserve possession arrangements in the
firms they serve as they in the actual sense cater to both the management and the stakeholders
as well (Slate.com.2000). Hence the aspects of CEO power and the financial performance of
a company are linked to each other, so much is the power delegated to the CEO. Performance
was discovered to be both antecedent condition and outcome of CEO power. Thus as from
the academic point of view, the CEOs possess adequate power to run the company as per
their terms.
POWERS THAT CEO ACTUALLY POSSESS- PRACTITIONER PERSPECTIVE
The above category of power possessed by the CEOs is basically a book related data,
however in the practical scenario, the powers differ to a great extent. One of the apt theory
associated with this perspective is the Organizational Behaviour Theory, which connotes how
people interact with others in the group and this helps to formulate a more effective
organization. Thus there powers even though described in the books, yet the kind of
behavioural pattern they adapt with the employees, help to formulate their powers as well.
Certain powers may not be construed to them but by virtue of the OB theory, the same can be
exercised if it is for the well-being of the concern (Daily & Johnson, 1997).
Even though it is understood that they have a wide arena of powers which they can exert in
the best interest of the company, but the point of conflict is that what kind of powers they can
exercise without consulting from the board of directors. At the time of exigency, they cannot
take decisions without consulting the board as these may have a significant implication on the
financials of the entity and ultimately the money invested is of the stakeholders and the
promoters.
A CEO has to understand the requirements of the board and then use its power. Thus the fact
that they have the authority to take strategic decisions, but independence is where the hitch
lies. Thus having paper based powers or minor ones is not enough (Glick,2011). Hence the
entire concept of CEOs possessing immense power is more academic than in actual practice.
RELEVANT ORGANIZATIONAL EXAMPLES

As is discussed, a CEO of a corporate has the power to cater to any kind of role it wishes
which would enable fulfilling of the company’s main goals and satisfying the promoter
owners as well. Thus they utilise their power while taking over the role of a chief strategist
wherein they would be able to address the complexity levels present in the multinational
corporations. For example, Coca-cola has 32000 staff members spread over 200 nations =.
Therefore the intensity and the speed of alterations look very significant. If the CEO feels that
the condition is unstable, then he would tighten his strategies and thereby plan the ways and
means of tackling the risks. Thus even though, academic perspective states certain set ways
and means handling strategic situations, yet the practitioner perspective makes it clear that the
level of power would depend upon the exigency of the situation (Farkas & Wetlaufer,1996).
There are times when the CEO has to take a decision irrespective of the fact they possess that
level of power or not.
CONCLUSION
Thus on a summarising note, it is observed that CEOs do possess power but the extent t o
which they are used independently is a question due to which people often find themselves in
a dilemma. Therefore, the extent of powers that CEOs actually possess is situational by
nature. The academic perspective fails to take into consideration the practicality of the
situation and the circumstances that would be prevalent at that moment. However, the
practitioner perspective too has some flaws such as it although gives powers which are huge
depending upon the situation, yet at the same time, the CEO also becomes accountable for the
result in a major manner. Although they possess immense powers, yet their hands are always
tied up irrespective of the perspective, as they have to think about the interest of the company
while exercising any of their powers in any situation.

REFERENCES
Daily,C.M. & Johnson, J.L., (1997). Sources of CEO Power and Firm Financial Performance:
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2018)
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https://hbr.org/1996/05/the-ways-chief-executive-officers-lead (Accessed on 07th May 2018)
Glick,M.B. (2011). The Role of Chief Executive Officer. Sage Journals. Vol.13. no.2. pp.
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(Accessed on 08th May 2018)
Sherman,F., (2018). CEO vs. Board of Directors. Available at http://work.chron.com/ceo-vs-
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Slate.com., (2000). What’s the Difference Between CEOs and Chairmen? Available at
http://www.slate.com/articles/news_and_politics/explainer/2000/01/
whats_the_difference_between_ceos_and_chairmen.html (Accessed on 08th May 2018)