Function of a Ceo

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The CEO and the Functions of Leadership

In a working paper presented at the June colloquium, HBS professors Michael Porter and Nitin Nohria consider the CEO’s role in the large, complex organization that is typical in today’s global economy. An excerpt follows:

“CEOs must ensure that the functions involved in managing any organization are performed to a high standard. There is a vast literature on the choices, structures, and supporting systems involved in modern management, including strategy, organization structure, planning and resource allocation, and management selection. What is not well understood is the allocation of responsibility for each of these areas among managers in the organization, and in particular, what the specific role of the CEO should be in each of them.

“It is beyond the scope of this paper to catalog all the functions involved in modern management practice. However, we can divide these functions into a number of categories that will prove important when considering the CEO’s role:

Direction: A core function of leadership is setting the strategy for the organization, and setting specific financial goals that the organization will seek to achieve. Identifying organizational values and ethical standards can be treated as part of setting direction.

Coordination: Organizational structure defines how individuals in the organization are grouped into units, and how these units coordinate with each other. Processes such as the product-development process or the customer-service process also enable coordination across activities and units. Both structure and processes must align with strategy.

Commitment: An organization’s leadership has to provide financial and other incentives that align with strategy and goals to ensure broad commitment to its mission.

Implementation: Systems such as budgeting, management development, and performance reviews are needed to ensure timely implementation of the organization’s goals and strategy...
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