Introduction
The roles and responsibilities of chief executive officers in the organization are in the spotlight. These CEOs provide direction or the right path to the business in the competitive landscape. It seems the top leadership of the company, which must portray ethical business practices. Unfortunately, many CEOs in corporations have represented unethical business practices, which hurt stakeholders and overall business outcomes. In this comprehensive study, the emphasis is on the different methods of CEOs. Some pertinent insights regarding ethical and business practices will be elaborated. Subsequently, three various case studies will also be illustrated to derive more insights regarding the role and responsibilities of chief executive officers.
Nice CEOs and Unethical Practices
Noam Chomsky has streamlined the difference between institutions and individuals. He optimized the difference by mentioning the institution’s stupidity. For instance, he claimed that intelligent people in an institution could depict collective suicide, as they can make blunders. The institution itself is not a bad thing. However, individuals working in it make it stupid (Gorman, 2017). Hence, by making this argument, the role of the CEO’s roles and responsibilities can be elaborated.
Yes, there is a problem when a nice person is involved in a corporation, which is triggered by unethical practices. When it comes to the involvement of a nice person in an organization, there is a need to assume that that person is an ethical individual. In the presence of many other unethical practices, this individual is always vulnerable (Carucci, 2016). It can be affirmed that ethical individuals can make unethical decisions due to the influence, power, and authorities of other unethical individuals. Although unethical practices are still attractive or appealing despite containing ethics and compliance policies in the company, unethical practices are still attractive. Many businesses have been involved in these practices, and collective suicide is done when an ethical individual joins these people. It is a huge problem, as it put both individual and corporation progress backward and ruin the brand image (Chomsky, 2014).
· Responsibilities of People to stop Unethical Practice
Some responsibilities for chief executive officers in the corporations are evident, as they are always in a better position to prevent unethical practices. First, these people have to create policies, which are to be communicated to all key stakeholders. People in the corporation must know what consequences they have to face if they are caught doing something unethical. CEO and other stakeholders at the top level have to enable critical practices such as ethical violation reporting, to reduce the visibility of unethical practice. Even in the hiring process, the essential thing for CEOs and related people is to hire the right people. People’s understanding is a kind of ability of the CEO to assess people. Another strategic consideration in institutions or corporations is building a culture of communication, openness, and transparency. These people must depict ethical practices or transparency at the top level to influence people working at the bottom-line. Consequently, establishing a culture in the internal business environment is a crucial strategy to prevent unethical practices, and CEOs in modern organizations are quite aware of it. Another way to stop unethical practices in different organization functions is to streamline the leadership. The leadership team, including CEO’s, can talk policies and compliances to all key stakeholders, as it will help to create urgency in the internal business environment. These are some key considerations or actions to get rid of unethical practice at both the top and bottom levels of the corporation (Douglas, 2012).
Out of Tough Corporations and CEOs
Michael Moore, an American filmmaker, and activist has claimed that most CEOs are out of touch in corporations due to influence and power. It is a fact that companies contain a substantial gap between the poor working class and chief executive officers at the top level. Even if an individual at the bottom-line observes a CEO doing something unethical, he cannot claim o make some arguments. The term “out of touch” has been coined in this context. In the organization, women and poor working class have been suppressed by top management, including CEO’s, as they don’t have time to make interventions. CEOs are still out of touch due to the top-down approach in many organizations. The poor working class is busy doing work and earning money. Anything going against rules and code of conduct will get them in a vulnerable situation (Knutsen & Pettersen, 209).
· Women and Poor Working Class
In his film, Michael Moore has depicted the struggle of the poor woman who has been raising snakes and rabbits to pay her bills. This bizarre occupation tells the whole story of capitalism, as he depicted how people at the bottom-level are struggling to meet their needs. CEO’s in the corporations must know these facts and understand the role of helping these people. The Chief executive officer must know how survival is difficult in predatory capitalism, especially for the poor working class, including women (Bernstein, 2010). Michael Moore thought that rich people would become more prosperous, and the poor would become more miserable in the future. Of course, CEOs are getting richer, as they have been paid higher than the working class. On the other hand, the working class, especially women, is getting weaker due to limited salary or income level. In his movie, he also portrayed the dismantling factor with some writing on the wall, as he wanted to paint the future (Day, 2019).
· Understanding and Knowing the Majority
It seems imperative for the CEO to know the majority and its needs. For instance, if CEOs find the majority as poor working class and women, he must know or understand the needs and wants to enhance satisfaction and improve their life standard. The first need of this majority is equal pay, as it will provide them with a motive to work for the company. CEOs are the only person who can understand the daily expenses of an ordinary citizen or working individual or woman. Based on the anticipated costs and needs of the poor working class, the CEO can shape effective employment policies or practices. Of course, it matters, as the CEO has the power to lead all departments, including human resources management, to make better employee strategies. Just hiring and taking work is not enough, as employee development can be a sustainable goal of both the CEO and the company. It is essential for a chief executive officer to know the majority, as the ultimate goal or purpose is to take action to reduce income inequality. For instance, in the United States of America, many people are struggling due to poverty, and even they cannot afford the house rent. Thus, increasing inequality is a kind of opportunity for chief executive officers in corporations to modify employee strategies. It can be said that the majority of the working class, including women, is struggling due to inequality, and CEOs are essential people to get rid of it (Manning, 2019).
Golden Handshake
The golden handshake is the stipulation in the employment contract. An employee in the company is usually offered a severance package against his job loss. It can be said as a pre-negotiated employment agreement or contract, which is to be provided to the executive. The golden handshake’s primary purpose is to leave the position early, and it opens new ways for corporations to restructure the business. Compared to chief executive officers, employees at the bottom line usually have smaller versions of a golden handshake. However, the amount, which is to be offered in cash or stock option, is handsome, and many employees accept it(Dandira, 2011).
· Actions Taken by the Australian Government
Amid outrage mover excessive bonuses gained by chief executive officers in Austrian compelled the government to outlaw exaggerated golden handshake. The Australian government has taken the appropriate action since the amount of the golden handshake is to be approved by shareholders first. The Australian government is trying to understand the cause of the golden handshake. For instance, if the company has not performed well, then why is an attractive golden handshake offered to employees? Promptly, under the new legislation, rewarding failure is unacceptable in Australia. All Australian companies, which have provided golden handshakes to executives, are under scrutiny. This action taken by the Australian government is pertinent, as the involvement of shareholders is mandatory. The most important thing is to prevent CEOs from getting excessive amounts, as it can put the organization and workers at the bottom-line at substantial risk (Booth, 2014).
· Ethical Issues for CEOs
The prominent ethical issue for the CEO is that he must resign from his post early instead of waiting for the company or shareholder to decide a golden handshake. It is a fact that the CEO is a contributor to business failure, and excessive rewards or amounts can make things worse. Ethically, chief executive officers have to take the responsibility and sideline them without talking an attractive amount. Due to the poor condition of the company, the management can terminate many of its employees. Thus, how a golden handshake for a chief executive officer can be justified when employees are terminated without having something. It seems unethical and injustice and the CEO must be aware of it.
Three Case Studies
Case 1
The first case was observed in Australia. The underwear maker brand offered a golden handshake to its executive, as he received a$5.8m. On the other hand, in this company, the management cut almost 1,850 jobs. It was unethical for both the corporation and the chief executive officer. The company reduced the number of employees to reduce business costs. Nonetheless, on the other hand, it offered millions to a single chief executive officer. This case study revealed that the company and chief executive officer contains unethical practices or behavior. They compromise the thousands of employees to facilitate the chief executive officer. Therefore, actions taken by the Australian government have been justified well (Connolly, 2009).
Case 2
The chief executive officer of CPA Australia also got the controversial golden handshake. Alex Malley took almost $4.9 million payouts after the leadership decided to sack him from his position. It is a fact that the members of the professional body kept the salary of the chief executive officer secure. It was a decision to terminate him, but it was too costly for the business or company. They claimed that he guided the CPA Australia sustainable growth. However, questions were raised regarding sudden termination with a substantial amount. It was unethical, as employees at the bottom-line in CA Australia were still waiting for increments and growth opportunities. The professional body made sudden decisions. Due to the amended Corporations Act 2001 by the Australian government, these kinds of choices can be investigated or prevented (Aston & Tadros, 2017).
Case 3
The third case is about Matthew Perrin, who was a chief executive officer of Billabong International. He got the golden handshake of almost $66 million, as even stock was sold to make this payment. This golden handshake provided an opportunity to live a loge on the gold coast. Again, shareholders were not involved in this decision-making process. Even it was revealed that not all of his policies and practices in the company were successful. His role in the company became controversial. Thus, the question regarding the golden handshake was raised, as he did not deserve a huge or substantial amount. In his corporations, sales and revenues were declining, and the company was planning to reduce the business cost and restructure things to get things back on track. Of course, it is not the right approach to pay high and get rid of any CEO who is not favorable for the company. Apart from corporation act 2001, the fair work act 2009 also comes into the life in this case, as the substantial amount offered to CEO was not appropriate, as far as the rights of other employees were concerned (Smh.com.au, 2002).
Conclusion
In the end, it is to conclude that the chief executive officer in the corporation has some roles and responsibilities. He is the only person who can influence people or stakeholders by depicting ethical practices or moral values. In this study, arguments of two thinkers, such as Noam Chomsky and Michael Moore, set the foundation for the comprehensive analysis. This analysis showed how a chief executive officer could be involved in unethical activities. Apart from it, some practices for these people are also presented to get rid of these unethical practices. Eventually, the golden handshake, the Australian government’s intervention, and three crucial case studies have been elaborated along with the association with related legislation. Ethical considerations are imperative for any chief executive officers, and according to new laws in Australia, they have to be more responsible.
References
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