Question

Changes in corporate leadership can have a significant impact on how the company functions. In 2007, Citigroup announced that Charles Prince would no longer be the CEO. Vikram Pandit was appointed as the CEO. Given that you are just starting this course and have only read the early chapters in the text, what impact might such a change have on the financial decision-making in Citigroup? Be sure to provide reasons and other examples to justify your answer.

Answer 1

To have maximum impact, the new CEO must have personal involvement. During transformation some CEO’s choose to hold separate review meetings for meeting the long& short term objectives to ensure that companies maintain a balance between operational improvement & long term growth i.e. revenue & volume growth through market share, new product channels & marketing, M&A, talent & capability management.

There would be lot of challenges for the new CEO because he must have right team in place, highly intelligent & ambitious people to align themselves in clear direction. The agreements are summarized as team charter for leading the transformation & can periodically ensure that the team is on the right track. The leader must make it clear to everyone to ensure who is doing what in order to keep transformation initiatives, budgets & financial targets knitted together. The available time must be spent wisely with 80% being invested for discussion & 20% in being presented to.

Transformations require extraordinary energy: employees must fundamentally rethink and reshape the business while continuing to run it day to day. Where does this energy come from? A powerful transformation story helps employees believe in the effort by answering their big questions, which can range from how the transformation will affect the company down to how it will affect them. The story’s ultimate impact will depend on not just having compelling answers to these questions but also the CEO’s willingness and ability to make things personal, to engage others openly, and to spotlight successes as they emerge.

The CEO must also have a go through on the previous CEO’s work like the approach taken by in making decisions. For example, in preparing budgets, the method that was followed by the previous CEO what were its benefits & drawbacks & what changes can the new CEO make like change in the method etc.