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Corporate CEO Selection and the U.S. Government Impact


During the past year, there has been significant focus on CEO selection and replacement, particularly in flailing companies who have asked for financial “stimulus” from the federal government. While public sentiment for replacing the leadership in an underperforming company is viable, additional thought must be given about who is chosen to lead the company. The criteria for CEO leadership of today’s corporation are pervasive.

Prior leadership experience, business savvy and financial knowledge are solid requirements for corporate leaders to have. However, integrity, sound corporate citizenship, and leadership development are traits that have forged to the forefront in today’s business environment. There is a shortage of leaders who fulfill all of the basic expectations that employees, vendors, shareholders, and customers look for in corporate leadership.

The CEO and Corporate Board Member Roles

The CEO role in U.S. corporations is unique. The CEO does not report to one individual – but to a group of individuals – the corporate board of directors. CEO dismissal and selection goes beyond impacting the company’s internal stakeholders. The CEO sphere of influence affects a firm’s shareholders, suppliers, and customers as well. Research has shown that behaviors and attitudes at the top levels of our corporations also impact our society. For example, a merger or acquisition may result in a positive outcome on the profitability, size, and growth potential of a company. However, that same merger/acquisition may also result in a negative outcome on job employment statistics (you don’t need two employees to do the same job in a merged company). Another example is unethical or illegal activity that results in devaluation of the corporate stock price. In some of these cases, honest hard-working citizens lose their life savings. As a result, a lot of thought, research, and analysis should be done in identifying and selecting a CEO.

The corporate board of directors is accountable for selecting the CEO, and monitoring corporate operations to protect shareholder investment. Government assistance (or intervention depending on your personal viewpoint) into the corporate CEO selection process introduces a new paradigm in corporate operations. Who develops the corporate strategy? What if the corporate board and federal government leadership disagree on how the company is being run? Is there now a federal government official placed on the corporate board of directors? Does the corporate board still have the responsibility and discretion to release the CEO when the company underperforms? Are the existing C-level executives also replaced, or are they retained? How is the CEO salary determined? Will consumers purchase products and services from a company that is perceived to be run by the federal government? Conversely, will consumers purposely purchase products and services from a competing company that is not run by the federal government? Finally, if any of these acts pose a threat to shareholders’ investments, is it still in the purview of the corporate board to act, or is it the federal government?

The Impact of Corporate Leadership Selection

There is a shortage of sound, experienced corporate leadership. Corporate boards make leadership development a CEO requirement. Along with guiding a company under the “normal” scrutiny of corporate stakeholders, the CEO must now also consider the ramifications of changing the course of an underperforming company under the watchful eye of government officials (considering they received “stimulus” funding). Hopefully, the development of C-level executives and potential future CEOs will continue as a critical function. Development and training for CEO candidates cannot successfully be conducted by someone who has not been in the position of CEO. Real-life application of theory and processes for leading a company must come from those who have lived the experience. Without a comprehensive leadership development initiative; the corporation will find itself with the same operational issues for the foreseeable future.

The consequences of selecting the wrong leader(s) are expensive. It will cost the company in terms of employee productivity, effectiveness, consumer confidence, perhaps even corporate survival. Measuring the success or failure of a new leader may take time. Installing a federal government-appointed leader will be closely watched considering recent events in the relationship between Corporate America and U.S. Government federal agencies. On the one hand, this action may result in public corporations operating in the same manner as some of our government agencies. On the other hand, this action may result in publicly communicating and addressing corporate practices/behaviors that are considered harmful.

Every major U.S. Corporation has in place an Office of Ethics or a Compliance Office. These departments do not manufacture products; they do not generate revenue; they are cost centers. They communicate corporate values and desired ethical behavior. But they also address corporate wrongdoing and mitigate the damage from lawsuits against the corporation as a result of corporate wrongdoing. The statistics on corporate wrongdoing are obviously not made public by the corporation. Maybe having a federal government-appointed leader will shed light on corporate practices and behaviors that were not meant to be publicized.


More information on corporate leadership can be found in Corporate Leadership Selection: Impact on American Business, Employees, and Society (Authorhouse Publishing). Feedback to the weekly blog entry is always welcome.