In general, Chief Executive Officers (CEOs) have a significant influence on their respective organizations. From the perspective of organizational psychology, CEOs have a considerable effect on the performance of an organization as a whole because of their influence on the lower levels of management. Liden, Fu, Liu, and Song (2016) note that the leadership style used by the CEOs affects not only the employees who report directly to them but everyone “several levels down the organizational hierarchy” (p. 10).
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As a result, CEOs’ impact permeates the entire structure of the organization rather than merely affecting the upper echelons of the personnel. As Liden et al. (2016) put it, CEOs’ “transactional and transformational leadership behaviors influence economic and social exchange perceptions of mid-level managers” and their attitudes to their duties (p. 2). Thus, CEOs have a notable influence in terms of affecting the performance of the entire organization rather than their immediate subordinates only.
The impact of CEOs is likely to be long-term rather than short-term because they have a lasting effect on the ways in which the organization happens. As noted by Liden et al. (2016), CEOs impact their organizations not merely by making situational decisions but by personifying their culture. As a result, the organization’s employees perceive them as critical in creating the context in which they work, meaning that CEOs affect the performance both directly and indirectly.
Hence, even after CEOs leave their positions, their legacy will likely continue impacting the performance of the organization on several levels because of the perceptions they instilled into the lower levels of management. This fact allows concluding that the impact of a CEO on an organization generally tends to be long-term.
Liden, R., Fu, P., Liu, J., & Song, L. (2016). The influence of CEO values and leadership on middle manager exchange behaviors: A longitudinal multilevel examination. Nankai Business Review International, 7(1), 2-20.