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Who is the small business CEO answerable to?

Published: 26 April 2007 by CA

I am "CA" Atreya (PMP, MBA), the author of this blog. I help businesses in Atlantic Canada achieve their BHAG successfully. You may subscribe to this blog using a feed reader (RSS).

We all know the routine in large publicly held organizations. The board helps in the recruitment of a CEO. This individual is answerable to the board and the shareholders of the company. Profit maximization is the goal and any CEO who does not measure up to the financial yardsticks is given the boot. A new CEO is then brought in – and the cycle continues. Even in large privately held organizations, shareholding may be distributed across a number of individuals and/or funds and the CEO is answerable to them.

Now let us turn our attention to small businesses. There are two main scenarios:

A small business funded by venture capitalist/s: Even though the CEO is the major shareholder, this individual is answerable to the VC/s, since future funding is at stake.

A small business where the CEO is the sole shareholder: (This scenario may also include passive investors - like friends and family) I suppose this scenario presents the maximum number of small businesses out there. And such CEOs are the focus of this discussion.The following questions come to mind:

  1. Is this individual answerable to anyone at all? If yes, then who? Is it the employees?
  2. What are the checks and balances through which it can be ensured that incorrect decisions are not being made?
  3. Should this individual place the organization’s interest above his/her own interests? More importantly, can a conflict of interest ever arise?

What do you think?

[Update]
I am tagging the following individuals for their thoughts:

  1. Dave (Business Advice Daily)
  2. Silicon Valley Blogger (The Digerati Life)
  3. Wayne (Blog Business World)
  4. John (The Freestyle Entrepreneur)
  5. Steve (All things workplace)
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4 Comments »

  • Corporate Vigilance said:

    [...]Who is the small business CEO answerable to?[...]

    # 30 April 2007 at 10:19 am
  • Career Intensity by David V. Lorenzo, Business Coach and Advisor said:

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    # 5 May 2007 at 8:07 pm
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    # 11 May 2007 at 1:55 pm
  • Startup Spark said:

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    # 21 May 2007 at 12:30 am

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