The Role Of The Hierarchical Management System Of An Organization

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The CEO’s position is at the top of the hierarchical management system of an organization and, as such, holds significant power to direct the organization towards an inspired vision. Their decisions are supposed to be reviewed and revised as organizational influences fluctuate and, ultimately, they must be aligned with the expectations of stakeholders. It is impossible for just the CEO to implement these decisions privately and without input from others no matter how hard he works or how smart he is. A CEO must rely heavily on others to run a successful business. Thus, using power wisely is one of the very important factors that influence the success of the organization How are we to judge if a CEO uses his power wisely? Obviously, at…show more content…
Welch spent more time with his HR executive than he did with his CFO. Therefore, he always found the right people for the right positions. NAME corroborated the business world’s perception of GE’s leadership cultivation practices saying, “When a company needs a CEO, it goes to General Electric, which mints business leaders the way West Point mints generals” (Get Me A CEO From GE, P1). Welch invented "vitality curve" method utilized to evaluate employees, which is supported by the reward system: salary increases, stock options, and promotions. These incentives encouraged employees individually and in their group effort. Secondly, Welch held high legitimacy in GE, which resulted from using his power wisely. It is legitimacy that gives a CEO the power to lead. A CEO’s ability to be an effective leader relies on the extent to which others voluntarily follow or defer to his or her authority (Porter, P29). According to Porter’s point of view, a CEO gains and sustains legitimacy by Formal Authority, Competence, Results, Fairness, Integrity, Putting the Company First, and Staying Grounded. Besides triumphing over six other candidates in the race to succeed Reginald Jones, Welch was respected for his experience (21 years in GE at the time he was promoted as CEO), and technical knowledge (PhD. in chemical engineering) and leadership capabilities (successful plant manager, group leader, sector leader). His
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