The most important abilities and characteristics for a CEO which will add value to the overall success of the organization are important abilities for a CEO in the light of which CEO characteristics and abilities will be judged. The most important member exchange theory (LMX) is relevant to CEO abilities which characterize the firm’s performance and its core competence, the quality of its products and services, including employees and stakeholders values. CEO as a candidate has several skills skill such as cognitive skills, interpersonal skills, transparency and execution skills and the capabilities of seizing given opportunities. Subsequent performance of the CEO based on execution skills and abilities.
Further, the s important abilities for a CEO is essential for enhancing the value of the firm and its success. On the other hand, noted that “in any well-run company that’s conscientious about grooming its managers, candidates for the top job are as similar in their education, skills, and psychology as to be virtually interchangeable.
All that matters is that someone is in charge.” contends that “management personnel can establish themselves by making manager-specific investments which make it difficult for shareholders to replace them”. Experts argue that “CEOs can easily impress their boards and essentially negotiate their own remunerations and benefits.
Remunerations and benefits are the determining factors to acquire more managerial powers as compared to his inherent ability”. In the recent financial crisis, many financial institutions, especially banks have analyzed that an increase in salary and benefits should correspond to the CEO’s productivity and efficiency, or determine whether he is only rent extraction.
The major problem is that the board of directors does not fill the position of the CEO randomly. Segregating CEO characteristics is sometimes quite difficult due to the nature of the organization which was determined by a purely cross-sectional study.
This offers the best opportunity for the Board of Directors to analyze the important abilities for a CEO including the productivity and efficiency of organizations after a change in the CEO of the organization.
Different theorists give evidence that CEOs have varied abilities and skills to increase productivity and efficiency of the organization Empirical literature also indicated that heterogeneity in talent, ability, and skill are essential for efficient actions and performance. emphasize that explicit CEO matters should be addressed for the future success of organizations.
Still there is a lot to be learned for understanding the scrupulous individuality as well as abilities of CEO and overall corporate governance and performance.