With the rapidly growing demand of goods and services of the public, an increasing number of corporations emerge with different sizes from giant firms to individual businesses. The responsibilities of a CEO, as a result, have been classified by a large amount of research to help to improve management efficiency. It is essential for CEOs to recognize their specific responsibilities in different sizes of companies, which are to be compared and contrasted in the following three phases, management models, obligation sharing and social responsibilities.
For CEOs in both large and small companies, the responsibility lies in choosing and following management models which set a proper framework for the companies. A management model is defined as the CEOs’ choices on managing the objectives, business activities and resources (Birkinshaw & Goddard, 2009). Every CEO should consider choosing and following the models as a primary responsibility because according to Birkinshaw and Goddard (2009), a management model involves fundamental principles which shape the specific management behaviors and show how the company will be run.
Birkinshaw and Goddard (2009) also give an example that reveals how successful the small corporations will be with the proper model. Happy Computers Ltd. was a failure as a small business. Henry Stewart, the CEO, then built up a specific model which contains the management principles: managers are chosen by abilities and are assessed by employees openly. As a result, client satisfaction rose up and the firm’s revenue doubled. It also makes sense in large companies. Rather than shareholders’ value, end-users’ satisfaction is set by the CEO of Google as the primary goal in the management model.
The change has made the firm the most successful search engine company (Schmidt cited in Birkinshaw & Goddard, 2009). These two examples demonstrate that setting an appropriate management model for companies can create more possibilities of increasing competitiveness; as a consequence, CEOs in all sizes of organizations need to take this responsibility seriously. Corporations of different sizes follow various management models to meet the needs for efficiency. One of the management models, the Planning Model, which suits giant firms, is operated with clearly defined management rocesses and strict hierarchical decision making (Birkinshaw & Goddard, 2009). Since this model can function properly only in the industry with mature business and a stable and predictable circumstance, CEOs should stress the obligation on acting as master controllers to sustain bureaucratic and hierarchical elements (Birkinshaw & Goddard, 2009). The Quest Model, whose feature is simplified management levels, on the other hand, is commonly suitable for small businesses in growth stages.
In order to inspire employees to present personal approaches to reach objectives, the CEOs would not restrict the employees’ preferences and creativities in forming methods of achieving the goal. To put it another way, employees are encouraged to be involved to quest better management activities. Therefore, in this field, CEOs’ responsibility in large companies is controlling abilities whereas those in small businesses focus on encouragement strategies. Obligation sharing is another factor that should be focused by CEOs in all sizes of companies.
Because of the widely emerged hierarchy system, in which managers are classified into senior managers, middle managers and first-line managers, CEOs need know their specific responsibilities among the managers. CEO is the most significant position in a company because it is admitted that besides specific obligations allocated to them such as marketing, production, finance management, and unlike lower managers, CEOs also need strategies and leadership (Akhouri cited in Khandwalla, 2004). These are the primary responsibilities of CEOs and more obligations are required to be shouldered by them due to the hierarchical management mode.
CEOs are also expected to supervise and cooperate with low-leveled managers, especially the middle managers who are directly conveying their messages. “Top managers are responsible for the upper layer of middle managers and working with them to implement the planning. ” (Bartol, Tein, Matthews, & Martin, 2005, P. 13). It can be concluded that CEO plays the determinant role in executing financial movements and in supervising other managers. The responsibilities of CEOs in large organizations differ from those of CEOs in small businesses because of the incompleteness of the hierarchy.
In large companies, it is likely that a top management team has several senior managers. According to Ward, Lankau, Amason, Sonnenfeld and Agle (2007), large corporations’ top executives, including CEOs, are possible to hold different ideas especially when they are from different backgrounds. As a consequence, CEOs in large companies should be skillful in coping with disagreement and reaching a consensus eventually with other senior managers (Davidson, et al. , 2006). However, CEOs in small businesses, whose top management team members is smaller than those in large companies, spend less time dealing with disagreement.
In most cases, the CEO of small businesses can solely make decisions and plans because there is only one top manager in charge of the company. Consequently, CEOs in small-sized firms have more independence on managing the organization. It seems that jobs for the CEOs in small companies are much simpler than those in large corporations, but is this always true? Actually, according to Davidson et al. (2006), due to the small management groups, the CEOs commonly cannot concentrate on their own work, which means they sometimes act as middle managers and first-line managers whose responsibilities are different.
As a result, CEOs’ obligations are not as centralized as those in large corporations (Davidson et al. , 2006). Furthermore, CEOs in small corporations have higher risks in making good decisions. They do not have to discuss the decisions with others before making them so the decisions may lack consideration. Hence, it is a wrong concept that the responsibilities of CEOs in large companies surpass those in small ones under the hierarchy system. Similarities of social responsibilities between large and small companies are essential concepts for CEOs to realize.
Shouldering social responsibilities means that companies make contribution to society and not be solely devoted to maximizing profits(Schermerhorn, 2004). The purpose of social responsibility is to provide higher standards of living, simultaneously preserving the possibility of making profits for stakeholders of the company (Hopkins, 2006). Corporate social responsibility will extend to CEOs’ obligation because their decisions and plans should meet the social responsibilities’ requirement. Firms are responsible primarily for owners, and then employees, customers and suppliers, and eventually for broader society (Robbins & Coulter, 2007).
Generally, CEOs in all sizes of corporations should highly consider the two previous stockholder groups, the owners and employees. The reason for all CEOs’ concern is that they are hired to develop and expand stockholders’ demand to maintain the corporations’ survival and meet employees’ needs (Bartol, 2005). Social responsibilities exist in both large and small companies; however, they may have different emphasis. CEOs in large firms should shoulder further social responsibilities, including customers, suppliers and broader society. These obligations are not the burden for corporations but the approach to further development.
According to Ferrell, et al. (2002), Microsoft, an international giant corporation, provides its globally used products with Multilanguage Pack, which supplies much convenience to its customers, making itself the world’s leader software provider in return. Furthermore, Microsoft contributes dramatically to charities. The fact is, in recent decades, Microsoft has donated millions of dollars and software to the society. All these above solved public problems and won the company great reputation, which are both beneficial for the further development. Conversely, for small businesses, the two obligations are said to be useless.
CEOs in small corporations should make best use of the limited fund, which is insufficient to meet other social demands, to maximize the profits. As a result, the two responsibilities, to some extent, can be neglected by small companies. Although the social responsibility is mostly considered to have been more shouldered by large companies, the essence of small-sized businesses should come into individuals’ realize. An important financial finding is that the donation of small business sector is $251million, overwhelming the large business sectors (Mankelow, 2008).
Mankelow (2008) also concluded that there is a growing trend of small companies in taking a larger share of social responsibilities. Despite the devotion of one small business is tiny, the sum contribution of all small companies is huge. The evidence should be realized by CEOs in small businesses for long-term running of corporations. Due to the essential role of CEOs in corporations of all sizes, constructing a definite responsibility framework of differences and similarities is inevitable to ensure that companies are functioning effectively.
It is obvious that the responsibilities of CEO have different emphasis in large and small firms while some parts are the same, and management model selecting and following, obligation allocating and social duties and are the distinct sections of all. Whatever the sizes of companies are, the primary responsibilities of CEO are the same, as well as some social duties and principles. In conclusion, all the CEOs in corporations need to shoulder the relevant obligations and they may have similarities and differences but all of them are essential to the companies.