Leadership Management Essay: Evaluating CEO Success and ESG Metrics

This essay examines the evaluation of CEO success in today's volatile business environment, moving beyond solely financial metrics to include environmental, social, and governance (ESG) factors. It explores the challenges of relying solely on financial metrics for long-term organizational success, highlighting the importance of a balanced approach. The essay analyzes the difficulties leaders face in balancing financial and ESG performance, using examples to illustrate the complexities of these competing priorities. It delves into the impact of focusing on monetary metrics and the need for leaders to consider the broader impact of their decisions on stakeholders, the environment, and the overall governance of the company. The essay also discusses the implementation of sustainable strategies and strategic initiatives to overcome the challenges. It also emphasizes the importance of training, employee development, and transparency for effective ESG calculation and implementation.

Running head: LEADERSHIP MANAGEMENT
Leadership Management
Name of the Student
Name of the University
Author note

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Introduction
In the current scenario of the business environment, the leadership is one of the
important functions of management which assists in maximising the effectiveness and
achieve the organizational goals successfully. As commented by Zhao and Murrell (2016), as
to run a business in a successful manner, the main activity which is required to be performed
by the leader is to manage the different kinds of activities for understanding the different
organizational activities which will be suitable in increasing the overall effectiveness of the
company in comparison to the other competitors present in the respective marketplace.
The different Chief Executive officers of the companies are the ones who cannot be
adjudicated on the basis of the economic performance of the company. The leaders working
in the companies need to be ranked on the basis of financial, performance, governance, social
and ecological metrics. The most operative leaders are considered to be the ones who are
capable of handling the activities of the company in every possible manner wherein both
employees and organization are benefitted in an equal manner.
In addition, the different leaders are required to be responsible for motivating their
subordinates and increase their morale for achieving the goals. In the respective essay, the
main evaluation will be related to success of the CEO in the present scenario which is
turbulent in nature. There will be inclusion of certain examples that will be helpful in
understanding and supporting facts. There will be inclusion of various challenges which are
faced by leaders when the entire focus is on monetary metrics. At last, the challenges are
required to be highlighted by leaders for balancing the metrics.
Discussion
Evaluation of Success of CEO in Today’s Turbulent World

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In the previous era of the business environment, the main focus was on the fiscal
metrics of the organizations and it was the only measure for understanding the rate of success
of the company in comparison to the other competitors. On the contrary, the financial metrics
cannot be only base for understanding and judging the achievement of the firm as there are
different other factors which needs to be incorporated by the CEO or leaders of the company
for understanding the situation or position of the company (Usman and Amran 2016).
The leaders of organizations need to look for social, governance and environmental
metrics in understanding the place wherein the organization stands and the requirements of
the different improvements which are needed. In the current scenario of complex business
environment, as to compete with other companies which are major competitors in the market,
there should be proper understanding and knowledge on Environmental, Social and
Governance metrics that should be suitable in delivering the appropriate revenues to the
different stakeholders and it will be creating optimistic influence on the business and in the
business environment.
According to Theodoulidis et al. (2017), when the achievement of the company is
being measured in order to the financial kind of metrics, it can be said that Amazon is the
most suitable organization which will be effective in topping the chart as they are being
ranked in the top 100 e-commerce companies in the world. On the contrary, Volkswagen is
the other organization which faced different kinds of challenges that was related to the
scandal of emissions that was responsible for degrading the status of company. The scandal
was related to the special device which was being installed by the company for 10 million
cars which ran in diesel in the entire world. The main purpose of the devise was to understand
the emission limits which was being managed by Environmental Protection Company (Stuebs
and Sun 2015).

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However, the respective device was suitable in understanding the level of emission,
however due to some fault, it was being seen that the devise switched off and due to the same
reason, there was emission of harmful kind of chemicals which was inclusive of Nitrogen
Oxide that produced smog. Due to the same, there could have been different diseases which
could have affected health of individuals (Saeidi et al. 2015). With the impact of the
respective incident, it was treated as the scandal and it affected the brand status of the
company. The respective incident hampered the faith of the clienteles on the company. In
such scenario, for gaining trust of the different customers back, the company tried to check
on the different cars and analyzed the issue which led to such issue.
The new CEO of the company understood the entire situation, and as an effective
leader, he tried to claim the fact that there was a technical glitch and they never lied to their
customers regarding the incident. In addition, Volkswagen ordered the whole new lot of
vehicles wherein he made it specific that he checked the vehicles and software himself for
gaining trust of the different customers back (Rodriguez-Fernandez 2016). From the
respective aspect of Volkswagen, it can be analyzed that the entire success of the company is
not only reliant on on the financial performance, there are various other aspects which
includes ESG as there are different stakeholders included in the process and their needs are
required to be met accordingly.
Lastly, the environmental, social as well as corporate governance related factors need
to be maintained and analyzed by the company which will be efficient in understanding the
ethical aspects of the business. The different factors of ESG are important in analysing
influence of the carbon or nitrogen emissions, waste production, development of the
community and other policies of corruption (Platonova et al. 2018). Apart from the different
financial metrics, it can be seen that the different organizations focuses on the various ESG

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factors that will be capable of determining the achievement of the company in a positive
manner.
Challenges of Focusing on Financial Metrics for Gaining Long-Term Success of
Companies
In the present scenario of the business environment, company mainly focuses on
different financial metrics for understanding the long-term success of the company. In the
competitive business environment, the financial performance plays a vital role in becoming
competitive and compete with the other competitors which are present. The different
organizations are becoming technologically advanced for maintaining the pace in the ever-
changing business environment which is becoming complex (Petrenko et al. 2016). For
instance- Honda and Toyota are the two organizations which only considered the monetary
metrics in gaining competitiveness. Both the companies are monetarily strong in nature and
due to the same, they have been capable of overcoming the blockades for the growth-related
prospects.
From the instance, Toyota Company situated in Australia and Honda Companies
faced various challenges in maintaining their strong image in the complex economy which
will be discussed in the respective paper. As commented by Madorran and Garcia (2016),
there can be inclusion of complexity in the business environment which has led to the
variations in the entire economic environment which led to negative impact on the growth.
Moreover, as opined by Luo et al. (2015), the organizations ignore the maximisation of
wealth and therefore, the development of the company becomes stationary at a certain point
and due to the same, there are various challenges which are faced by the company (Nollet,
Filis and Mitrokostas 2016). The companies need to understand the profit maximisation is the
crucial element along with element for making their position stable in the market, however,

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the management of the company needs to understand the fact that the different revenues
earned by stakeholders, the companies should not depend on the same as each of the
stakeholders are liable entirely for the downfall or growth of the company (Lins, Servaes and
Tamayo 2017).
From the case of Honda and Toyota, it can be seen that the revenues or the profit
which is generated by the different individuals alone is different from the wealth generated by
the entire organization. It can be seen that the different stakeholders focuses on earning
separate profit, and they focus very less on organization’s growth in the competitive market
which is becoming effective (Martinez-Conesa, Soto-Acosta and Palacios-Manzano 2017).
These are the different challenges which are being faced by the companies by mainly
focusing on financial metrics. Therefore, from the case of Honda as well as Toyota, the
conclusion which can be drawn is that the effectiveness of the team and revenues generated
from the team needs to be considered for understanding and generating the entire success of
the firm in a successful manner. In the current complex business environment, there should
be development of the different strategic initiatives and sustainable strategies which will be
suitable for overcoming the various problems and enhancing the financial metrics of the
entire organization suitably (Martin, Yadiati and Pratama 2018).
The Chief Financial Officer of the company needs to be responsible for the different
kinds of financial decisions which are being taken in the company and he/she needs to take
care of the various expenses which will be incurred by the company. It will be suitable for the
management in developing budget specifically for the coming years. The different
shareholders are responsible in an equal manner for development of the sustainable strategies
for generating success of the company which will be maximising the profitability of the
company and the employees in a suitable manner (Maqbool and Zameer 2018). When the
budget which is prepared by the finance department is less than the different expenses which

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are made, the company will be facing severe damage in the coming years as the cost related
to production is higher in comparison of the generation of revenue (Adeneye and Ahmed
2015). Therefore, from the entire analysis, it can be analyzed that these are major challenges
in mainly focusing on financial metrics of the company as it would be affecting the
development of the company as the employees focus on their individual profitability and
revenues.
Challenges Faced by Leaders in Balancing the Financial and ESG Performance Metrics
From the different surveys, it can be seen that there are different kinds of issues faced
by leaders in balancing the financial and the ESG metrics in a sustainable manner. In such
scenarios, the companies need to develop few strategies which can be implemented by the
company for developing and improvising the presentation of the organizations effectively. In
the respective case, the different leaders such as CEOs are the major asset of the company
and they are responsible for development of companies which allows them in growing in
competitive market (Lin, Ho and Sambasivan 2019). For example- Woolworths is one of the
successful companies which have been successful in becoming most effective as they have
been able to balance the financial and the ESG metrics equally and it has been able to make
them more effective in managing the business operations (Ağan et al. 2016).
However, the different companies such as Wesfarmers are not capable of balancing
the two metrics respectively the ESG and financial approach which are described as follows:
Firstly, the defining of sustainability practices is the main challenge which is faced by
many companies and due to the same, their reputation is hampered. In such scenario, the CSR
practices or the corporate governance aspects need to be incorporated by the company as the
environmental protection plays a vital role for improving the brand image of the company
(Hasan et al. 2018). For gaining competitiveness in the business environment, it is required to

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operate sustainably which would be helpful in exploiting the different resources which are
obtainable to them.
The second aspect is the fact that ESG calculation is complex processes which cannot
be incorporated by the companies easily. There should be inclusion of proper training and
development programs which needs to be incorporated by the companies for the employees
as it will be making them aware regarding the same for analysing the uncertainties which can
affect the evolution of the firm (Gras-Gil, Manzano and Fernández 2016). There should be
appropriate gathering of data that needs to be incorporated as it will be make the process
simpler and it will be suitable for managing growth prospects of company.
Moreover, there can be different financial issues which are confronted by the different
firms that needs to be sorted by different leaders such as CEOs and the board members of the
business as it will be effective in figuring out the different problems which needs proper
generation of solutions (Galant and Cadez 2017). From the example of Woolworths, kit can
be seen that the company has been capable of becoming technologically capable along with
environmentally sustainable that makes them effective in managing the growth prospects of
the corporation in a positive manner.
Recommendations for Addressing the Respective Challenges by Leaders
In the last five years, Woolworths have been successful in designing the different
strategies which have helped the company in development of the operations successfully
(Flammer 2015). The balance between the financial and ESG metrics needs to be
incorporated by the companies as it will be enhancing their growth in near future which helps
them in gaining profitability and revenues for the entire firm. From the same, Wesfarmers
have been paying attention for such issues and they have made it definite to lessen the
utilisation of polythene bags and become eco-friendly company (DiSegni, Huly and Akron

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2015). The CSR related operations are the most efficient aspects which needs to be adapted
by the company as it will be boosting the growth of the company and it is extremely effective
in balancing the ESG and financial metrics which will be helping the company in operating in
the competitive market in more competitively (Cornett, Erhemjamts and Tehranian 2016).
Conclusion
Therefore, it can be concluded that the respective essay has been capable of making
the organizations understand that in the turbulent world or the business environment, the
concentration on the fiscal metrics can be challenging as there are different other factors such
as environmental, social and corporate governance factors needs to be considered for the
overall success of the company. The evaluation of the success of the company and the
stakeholders that includes the employees, shareholders and the employees are mainly based
on both ESG and financial performance of the companies. In addition, from the different
instances of the companies such as Toyota, Woolworths, Wesfarmers, Volkswagen and
Honda, it can be seen and analyzed that these are the most effective companies in managing
the development of the companies, however, the environmental and the corporate governance
related factors are required to be identified which will be efficient in improving the different
business operations successfully.
From the instance of Volkswagen, it can be identified that the company was not
successful in managing the different kinds of environmental factors and due to the same, the
new CEO tried to identify the different issues and the reasons for the nitrogen oxide
emissions, it can be seen that company was successful in the future when the company tried
to incorporate strategies of CSR programs and it became the most successful company in the
market. On the other hand, Wesfarmers tried to implement the strategy of CSR program
which helped them in reducing the usage of plastic bags like Woolworths for enhancing their

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brand image successfully. From the different instances of the companies, the recent incidents
of Volkswagen, it can be seen that the maintenance of the ESG and financial metrics are
needed to be maintained appropriately for generating successful results.

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