John Chambers (Cisco CEO) - The Role of Decisiveness and Decision Essay

John Chambers (Cisco CEO) - The Role of Decisiveness and Decision Making - Essay Example In October 2011, Cisco’s net income dropped by 8%, while earlier in august this year, the net income had dropped by 36%, although it later on rose by only a small margin of 3.3%. Shareholder value creation is one of the most important strategies in an organization, and should be a priority for a CEO; however, Chambers has failed tremendously. According to Rappaport (2006), executives should always make decisions that aim at maximizing value. In addition, at times, it is wiser to return the shareholders cash in dividend form, rather than using excess cash in investments that end up being destructive. Therefore, excess cash should be returned to shareholders when the value-creating opportunities are not available. In addition, an organization should focus on the activities that contribute to long-term value in the organization. Decisiveness is one of the major qualities of a successful chief executive officer; the act of being determined is evident in Chambers such that, despite the rise of Cisco from $1billion to $40 billion followed by the challenges in 2001, Chambers has continued to hang on in the company’s leadership. ... argues that the continuous recovery of Cisco can be attributed to the CEO’s leadership skills, as he is known as an effective communicator and motivator of employees. Literature Review John Chambers, the Cisco’s CEO, has faced both negative and positive remarks concerning his role in the company. The failure to persuade the public that the company’s future earnings are reliable is one of the existing critics. Chambers replaced the top-down decision-making process with the committees of executives. This strategy required most managers to spend their time in committees; this absurd system was later on abandoned. According to Geothals, Sorenson, and Burns (2004, p.319), the presence of the correct information leads to informed decisions, whilst decisiveness creates room for timely actions. Nevertheless, inconsistency and failure to fulfill promises in a CEO creates an atmosphere of mistrust from the employees and the customers. Therefore, an open management style co ntributes to the development of trust, improved communication skills, and listening skills as well. However, ineffective communication leads to poor teamwork due to lack of collaboration, decrease in productivity, and high levels of turnover. Decisive managers are aware that their decisions may not be effective; hence, they leave room for modification, and therefore, they do not hesitate to modify their decisions once they realize that their original decisions are not effective. This is evident in Chambers case; for instance, when chambers changed the company’s top-down decision-making process to manager’s committee strategy, the new strategy proved ineffective as managers spent most of their time in committees. However, Chambers reconsidered changing the strategy after discovering that it did not