THE NEW DNA OF CORPORATE GOVERNANCE - 2007
Published in the GO Society's book, Organization Design, Levels of Work Compeixity and Human Capability 2007
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Mark Van Clieaf, a consultant for many years in the area of CEO performance/accountability and corporate governance, and Janet Langford Kelly have used requisite theory in their analysis of CEO performance and board governance processes. The board’s obligation is to determine the level of work required to execute the organization’s strategy and to recruit an executive with the appropriate level of capability and compensate him or her accordingly. With the objective of having boards add maximum value to the company, they maintain that levels of work (LoW) from requisite theory should be applied to both the CEO and the board, and that boards should use LoW to specify the complexity of role of the CEO and judge the CEO’s performance. Moreover, compensation levels for CEOs can be set more objectively if the complexity of the role is used as the measurement, not fictitious comparisons with other CEO roles that have much higher levels of complexity.