Regardless of whether it's a big or small company that he or she oversees, the CEO is usually instrumental in setting the tone for an organization. CEOs are able to use their power and method of leadership in a way that motivates employees. For instance, if employees get the impression that their CEO is working as hard as they do and that he or she really appreciates their hard work, this can elicit loyalty from all levels of employees. But the CEO doesn't always set a positive tone; his or her behavior can discourage employees as easily as it bolsters their morale. If a CEO comes across as unattached to the company's employees and flies off frequently on exotic vacations, employees may not feel compelled to work hard for him or her.
Many people assume that because of their heavy responsibilities, CEOs are especially prone to stress-related health problems. According to some research, however, those in mid-level management are more likely to develop health problems than those who work at higher levels of the corporate ladder [source: Quick]. So it would seem that more responsibility doesn't necessarily equate to more stress. However, some argue that top-ranking CEOs are able to avoid job stress by dodging responsibility. When a company's performance takes a dive, CEOs may try to pass the buck down to lower executives. Although this is just one possible explanation for why CEOs wouldn't be as stressed as some of those managers to whom they delegate power, shirking responsibility has shown to be an unwise business tactic. According to some studies of Fortune 500 companies, when high-level executives take the blame for slumps, it's more likely to result in improved performance from the employees [source: Pfeffer]. Other studies confirm that even in hypothetical situations, employees are more likely to approve of and respect executives who shoulder the blame for unfavorable events [source: Pfeffer].
Because CEOs are so vital to the success, identity and tone of a company, controversy always lurks around the corner when the top dog retires, as we'll see next.