She/he doesn’t necessarily have the authority to approve things on her or his own. First, she/he might have to get the agreement of the board of directors.
Especially in conservative environments, women more often than not face far more hurdles to climb the ranks. When they finally achieve their goals, they can end up as figureheads. But it’s not just a gender thing:
Corporate culture
“Is it okay if I stamp this?” the CEO asks. The board approves –
And only then she/he does the ‘stamping’.
You worked so hard on yourself, improved and now there is all this bureaucracy, politics and what not? Welcome to corporate.
Why you may ask? Because stock companies do pay out money, but the system is such that, at the end of the day, the group of shareholders who are amateurs at business management root for the professional representative directors to keep improving their business, to profit from stock dividends and sales.
The representative directors are the key players, which means the “representative director CEO” is nothing but another representative director.
Your idea of a CEO may actually be a
“Representative director”
Legally speaking, there is not a single mention of “CEO” in Japan’s business laws. The term that is used is “representative director.” This is similar in most jurisdictions worldwide.
Different terminology
Side-note: Titles like “Founder” mean nothing.
The number of members on the board of directors is determined on the basis of the company’s rules or “articles of the corporation.” Based on these rules, the board elects the representative director.
But don’t let all these corporate games fool you. With the right mindset, empathy and most importantly by keeping the integrity, you can continue to thrive towards the top. There is much to create after all! But being creative in such an environment can be difficult. Constantly watching out not to step on someone’s toes is tiring and just like Buffet said:
It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.
Warren Buffet
“CEO” — sometimes nothing but a title.
Young business managers nowadays do call themselves “CEO” or “Chief Executive Officer,” but more often than not it’s just an arbitrary title.
The only person that matters is the representative director. This can be the CEO but doesn’t have to be. There are even CEOs who have no representative authority or companies of which all directors are representative directors.
Just remember that each company has its own system and titles do not equal power. Titles can be tricky.
If you have always pictured CEOs having great power to steer their companies wherever they see fit, that’s not always the case. It can be very difficult to get the board of directors to unanimously ratify decisions. The more fraction, the worse. This is one of the biggest reasons Japan and countries with similar corporate-culture are struggling so hard.
What about the companies that recovered victoriously because they changed the executive director? When they were in the red badly but turned things around? You would even hear about “strong leadership” and so on.
In those cases, the entire board of directors got replaced.
Shareholders aren’t going to tolerate continuous losses. They will demand a replacement of the entire board if things are bad enough, from the chief director down. When a business is not showing results, then the board has to take responsibility and step down from managerial positions. This is a natural course of action with all stock companies.
*(Japan is a bit of an exception. Sometimes investors tend to ‘pickle bad investments in salt’ and continue funding even bad performing companies. Executives and even employees would not get fired but rather put into new positions regardless of their performance and additional payroll is added in the form of new managers taking over. Getting fired in Japan is still rare.)
Various groups clash and wrestle for leverage in an unending process, and the ones that win choose their representatives to keep business going. These factional disputes can get quite scary and fierce, but it’s human nature and inevitable.
When people band together, they divide into smaller cliques; it’s par for the course. It also means that the outstanding people at the top who can turn a company around will have the charisma to win people over.
But representative directors don’t just solidify their organizations. They have to guide their companies in the right direction and they won’t be trusted with this task unless they have their own business philosophy.
In simple terms, they are like baseball and soccer coaches.
In baseball and soccer, the strongest teams are those whose coaches don’t have to do anything!
No team that needs its coach to give them detailed signs for plays can ever win. The players have to solve their own problems, or else they won’t grow.
A strong organization is an organization of autonomous thinkers and doers.
Those on top are responsible for designing and building that kind of system.
Conclusion: Don’t blindly trust titles. There is a lot of politics going on especially in big stock companies. A lot of resources and speed are spent on management that might not be needed at all (or even make things worse). A really strong organization is loaded with autonomous thinkers and doers and virtually no management. Stay foxy!
About the author:
Joey Bertschler, a 26-year-old Austrian born multi-corporate executive dropout. Visited 2 dozen countries and is now working on the United Nation’s 17 sustainable development goals. Balances multiple roles across marketing and tech companies.
VP of the Security Token Alliance, the world’s largest think tank for the Security Token industry with over 100 partners, Advisor to the World Data Science Forum, and Brand Manager at bitgrit and Cosmology Inc. Has reached audiences of millions on social media channels and is involved in a plethora of marketing campaigns.