Sears CEO Duality Case Study

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While the modern social and economic conditions have been changing fast in the past two decades, many retailing companies seem to be struggling to keep up with all these changes. Of course, Sears is not an exception. For instance, the development of e-commerce, the expansion of international trade, and the changes in the demographics and consumer’s taste have shrunk Sears’ market share to the extent that many consumers cannot recall their last Sears' visits. Having a well-established board structure is no doubt an essential component in the success of the company, helping in dealing with changes and uncertainties to turnaround the struggling companies. Through our examination of the company and the findings from the academic literature, we …show more content…
Sears has implemented CEO Duality policy for its board structure since its glory days. CEO duality is considered to be effective in term of aligning the corporate strategies and its implementations. It helps the corporation in achieving its goals smoothly. While CEO duality benefits a firm’s objectives in some circumstances, this policy gradually lowers the overall performance of the company if the CEO is not the right fit for the positions. One finding that we found interesting about the board structure …show more content…
Lorch has discussed the disadvantage of having CEO duality is the CEO tends to dominate the board meeting to accomplish his goals, while independent chairman tends to promote quality discussions among board member (Lorch 2005). The finding of Pat and Baker 1987 from the survey shows that “having board leadership would be appreciably over time if the board chairman were not part of active management.” CEO duality creates the area for the CEO to act in his interests because he is the one who watches his back. Therefore, the CEO can take advantage of the positions to manipulate the outcomes of his performance to get higher compensations. Secondly, everyone has a blind spot because it is hard to analyze one’s own mistakes. In the same paper, Lorch also discussed the resource dependency theory that can be somehow related to the case of Sears, in which Lorch discussed that the “characteristics of an effective board would vary as a conditional of environmental conditions.” Finally, just because the board structure worked in the past, it does not guarantee to continue working in this technological era. Therefore, adjusting the board structure in according to the changes in the uncertainties of the external environment is necessary for the survival of

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