CEO Evaluation: Financial, ESG, and Stakeholder Metrics Analysis

This essay delves into the multifaceted criteria for evaluating a CEO's success, moving beyond traditional financial metrics to encompass Environmental, Social, and Governance (ESG) principles. It emphasizes the crucial role of leadership in navigating the complexities of a competitive market while adhering to ethical standards and stakeholder expectations. The analysis explores the significance of financial metrics, risk management, legal compliance, and corporate social responsibility. It examines the application of theories like Mental Model theory and System Thinking to understand how leaders can effectively balance profit-making with ethical considerations, resource allocation, and stakeholder relationships. The essay further investigates approaches for integrating financial and ESG metrics, addressing the challenges of management, productivity, and risk management, illustrating how leaders can foster sustainable growth and maintain a positive societal impact.

Leadership -A Critical Perspective

Introduction
CEO plays the most important role in a company. The success of organizations is generally
associated with the personality and performance of the organizations. The organization has to
function in the fiercely competitive market. Due to this the organization has to go through
turbulence and it is at these times that the leader of the organization has to take command and
manage the situations.
Success of the organization traditionally was evaluated based on the financial success of the
organization but lately the metrics have undergone a few changes. Environmental social and
corporate governance has now come to play an important role and it is for this reason the latest
Harvard Business Review placed Jeff Bezosat 71 whereas financial metric should have him at
top.
With increasing pressure on the environment and ethical standards taking a firm shape, it is
important that the organizations are functioning on these lines and the profit making is done with
all the metrics fulfilled.
In order to measure the success of the CEO, the metrics need to be employed. Here, it is not only
the financial metrics that are important but also the Environmental social and corporate
governance (ESG). Here in this essay, the main aim is to explore all the metrics that are required
in successfully evaluating a CEO. Here in this research study there shall be an analysis of the
ESG principles and how it is not possible for the organizations to keep on increasing the market
share and profits without taking the well-being of all social units into consideration. An
organization can prosper in these lines only when it has a CEO or the leader who can push the
operations and the management towards these ethical goals.
Without the leader, it is not possible to bring in innovation and new technologies in the
production process and, at the same time, is knowledgeable of the ways that ethical standards can
be maintained.
Theories and literatures play an important role in understanding a situation and arriving at
conclusions that can be applied to the business world.

Question 1
The very first metric that is taken while the success of the organization is evaluated is financial
metric. This is quite important for the company to function in the market and without making
this the primary motive, it may be quite difficult for the organization to survive, grow and pay
adequately to the employees. Hence, when we are discussing the metrics for a successful
organization, it is impossible to not take finances into consideration.
Risk of Deviating from the Standard Ethics
However, once the organization reaches a financial pinnacle, there are other metrics that come in
play and it is only after adhering to those standards that the organization should be evaluated. An
organization engaged in chemical based product may be making a good profit and employing
considerable number of employees but could also be damaging the environment with its ill-
equipped chemical treatment. This must go down as a negative point in the credibility of the
organization. Customer relationship and corporate social responsibility are other important
elements that need to be included too. The organizations that are excelling have incorporated all
these so that they have the support of all the stakeholders.
Environmental factor is also important and it includes the way company is using the energy and
treating the waste and the effect that it is having on the biosphere. Conservation of resources and
animal treatments are other vital factors of Environmental social and corporate governance. Here
the risk factors are going to add to the credibility. Risk management is an important factor that
makes the organization has a holistic approach not just for itself but also for the environment.
Legal Complications
Compliance with the legal standards is something that is often not straight away concerned
because the regulations are mandatory. Yet, there are several regulations that are not followed by
people. These also are factors to be included. The leader must be aware of it and ready to have
compliance with it as well.
Inability to keep to these standards may cause a loss of reputation. The way customers are treated
and the way employees are rewarded goes a long way in making organizations have more

philanthropic points. It is the leadership of the CEO that becomes instrumental in having these
criteria bought in effect (Crane Matten& Spence 2019).
Wal-Mart was accused of dumping hazardous waste in the drains of California. This brought
great reputation harm to the CEO, Dough McMillon. Later, the leader along with the whole
collectively apologized for it and settled the charges.
All the mentioned organizations are financially successful and have been making profits out of
their production of goods and services. Hence, the question remains to be fulfilled is what is it
that defines success?
The investors who are young and have recently entered the industry are more inclined in outing
money where the social value is high. Thus, the mutual and brokerage firms are seen offering
exchange-traded funds and the financial products that are following the principles of ESG.
Question 2
The prime aim of the leaders is to make the organization grow through profits and also by
keeping the stakeholders in good terms with the company. It involves ethically treating the waste
and the animals and making human resources feel valued and not subjugated. Hence, it is not
hard to exclaim that just the financial metrics are not going to get the company that place it is
hoping for especially in the perspectives of employees and customers. The legal body of the
nation must also ethically validate the operations of profit-making organizations (Flammer
2015).
Here, it is the job of the leader to bring these aspects of new definition of a successful
organization together and make sure that the organization is functioning well. Mental Model
theory is found relevant in this context. Mental model are the theories that are there in the minds
and perception of people regarding a system. It is a perceived reality. This can also be defined as
a picture that exists in the mind of a leader and it is this picture which plays a vital role in
determining the thoughts, actions taken and relationship established with others (Saeidi et al
2015).

In any system in the world, there is perception in minds that it should function in a particular
manner. This is the case with organizations also. A leader must be able to understand the way an
organization must function and have relations with all its stakeholders. The societal standards
and ethics must be followed with legality perfectly in place.
Profit is a monetary term and can be made even without considering the ethics. If an organization
is bent on building is reputation on ethics then it is important that elements of ESC are
incorporated and it is one of the challenged that leader have to face. The leaders have to protect
the image of the firm as well make the money for the firm(Ondoro 2015).
Robert Townsend said that organizations cannot be run as an administrator where the leader has
the desire to rule and dominate. The leaders must be the one who carries water so that the people
are able to finish up the job. On the other hand the leaders are also supposed to design and decide
the response that is to be given when the organization is facing an issue or going through a crisis.
Hence, it is the two mental models that can be used by the leaders in order to make the
components of the organization function in unison with each other (Ondoro 2015).
System thinking is going to play an important role. Organization has smaller parts and these
components are inter-related and function together. The organization is a small system amongst
the larger system. System thinking breaks down a component into smaller components. System
thinking results from effects of reinforcing and also balancing processes (Covin&Slevin2017).
In system thinking the thing that is most important is giving attention to the feedback. In system
thinking there is a use of diagrams, graphs and models which are instrumental in predicting the
behavior of the system. Systems thinking were invented in the year 1956 by Professor Jay
Forrester. He originated the Systems Dynamic Group at MIT's Sloan School of Management
(Draft 2014).
Relationship with the stakeholders gets degraded when the ESG is not considered. The investors
who are young and have recently entered the industry are more inclined in outing money where
the social value is high. Thus, the mutual and brokerage firms are seen offering exchange-traded
funds and the financial products that are following the principles of ESG (Unit 2015).

One of the major challenges that are is resource allocation and cost. When a leader is trying to
have the sustainable and environmental friendly methods of production he or she has to incur
some cost in the form of technology and buying equipment that will enable the green method
production. Here the major challenge that the leader as the main decision-maker is going to face
of the additional cost and this cost has to be managed. If a leader engaged the company in water
treatment and reducing then the plants has to set up which is the duty of the leader to lay the plan
of
Consumers are increasingly becoming aware of the conduct and ethics. The work carried on by
NGOs and researching associations have spread awareness with regards to the environmental
concern. The propagation of ideas has made the consumers ask questions from the CEOs that
they are buying products from (Grayson & Hodges 2017).
Question 3
Sustainability and Advanced Growth
In order to balance the metric of finances and ESG, the CEOs or the leaders can adopt this
approach. Here the main aim is to measure the growth of the company as well as the revenue
from the sustainability advantage. The leaders here ensure that ESG values are inculcated in the
operations.
As a leader it is possible that there is a balance maintained between financial metrics and ESG.A
major challenge here is management. If two components –finances and ethics, are managed
together it is bound to create more pressure on the leader. Hence, the very first challenge comes
in streamlining the management process.Any kind of care not taken for the society due to
production will bring all the queries to the leader
A Productivity not devoid of Sustainability

The leaders, in order to maintain the balance, can measure the total financial impact of the steps
hat have been taken towards sustainability. The leaders have the pressure to cut down the cost
and make the product as low in cost as possible. The stakeholders have their own different
demands. The stakeholders like investors, consumers and suppliers have their demands that have
to be met by the organization, both in terms of financial metrics and ESG
(Lokuwaduge&Heenetigala 2017).
Risk Management
In order to have a balance between the two, it is quite important that the concept of moral
leadership is brought into action which is again a challenge because the leader has to modify the
personality based what the expectations are and at the same time has to include the risk
management measures..The morals in leadership will also include the grace and truthfulness that
one has in the personality. This is vital in making the organization liked by the members of the
society who form the essential stakeholders as the organizations grow.
The CEO of Nike Mark Parker used the waterless technology of dying the shoes as a step
towards sustainability. The plan that was set up had huge installation cost. Low sales would have
brought also. Leader had effectively planned out the production and predicted the appeal it
would have to environmental conscious consumers. It recorded a great sale.
Conclusion
The essay has relevant theories that have helped in better understanding and elaboration of the
topic. The global phenomena of business are taking shapes that are determined by technology
and other marketing strategies that accelerate the growth of an organization. Amidst the
expansion, it is also important that companies adhere to the ethical standards.
Success of the organization conventionally was assessed based on the monetary success of the
organization but lately the metrics have experienced a few changes. Environmental social and
corporate governance has now come to play an important role and it is for this aim the newest
Harvard Business Review placed Jeff Bezoz at 71 whereas financial metric should have him at
top.

Now sustainability and CSR has gone a long way in adding the sales and appreciation boost that
traditionally was only obtained though hard-core selling of products and services and cutting
down cost. Environmental social and corporate governance (ESG) has become more mandatory
than choice and with more companies going for it, it is seen that it has established itself as an
important parameter.

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