Here's a detailed solution to this question.
Dataset:Quote:
A growing company seeks a new CEO. The company—which has always been led by members of one family—wants to make a change in order to generate revenue quickly, possibly by hiring a famous CEO. Promoting from within has been a successful strategy for the company, yielding many of its most effective high-level managers. However, many companies are now hiring famous CEOs who are famous because they have impeccable qualifications and experience running many different kinds of companies.
Interpretation:- The objective of the company is to
- Change leadership from family led to hiring a new CEO
- Generate Revenue Quickly
- Strategy 1: Hire a Famous CEO (from outside the company) for the following reasons:
- Generate revenue quickly
- CEO will have impeccable qualifications
- CEO will have diverse experience
- Strategy 2: Promote from within (from within the ranks of the company) for the following reasons:
- It is the current strategy in place.
- It has been successful in yielding highly effective managers/leaders
Question Stem AnalysisQuote:
On the basis of the information provided, select Famous CEO for the principle that, if accepted, would most strongly imply that the company should hire a famous CEO, and select Promote from within for the principle that, if accepted, would most strongly imply that the company should promote someone within the company to the position of CEO. Make only two selections, one in each column.
The given table consists a list of 5 statements. These are principles we need to evaluate. Keeping in mind the data provided/summarised above, from these five choices we need to select one principle which, if accepted by the company, will help the company choose strategy 1, and another principle which, if accepted by the company, will help the company choose strategy 2.
Statement AnalysisQuote:
A. CEOs have a responsibility to ensure that the companies they head remain profitable.
This choice mentions "remaining profitable". This deals with revenue indirectly; however, it does not mean the same as "generating revenue quickly". Hence, this choice can be eliminated for both columns.
Quote:
B. A company should not dispense with a current strategy unless that strategy has proven to be unsuccessful.
At first glance, this choice comes across as vague because it doesn't mention "CEO" or "promoting from within". And so, one is tempted to eliminate this choice as a knee-jerk reaction. However, that would be a bad decision. Let's dig deeper. This statement says that if a current strategy adopted by the company is successful, then that company should stick to that strategy. The dataset mentions that the current strategy is to "promote from within" and that so far it has been "successful" in yielding highly effective managers. Hence, if this statement is adopted by the company as a principle, it leads us to believe that the company should promote from within. Hence, this is a valid answer for column 2.
Quote:
C. A company should choose as CEO the candidate who has the most experience in that company's specific industry.
This statement mentions "most experience in the company's specific industry". This hasn't been mentioned as a reason for adopting either of the two strategies. And, if we reason this further, "most experience in the company's industry" is not a factor exclusive to those working in the company. Candidates outside the company but within the same industry could have more experience in the company's industry. Hence, this choice can be eliminated for both columns.
Quote:
D. A company will often see a quick rise in revenue immediately after hiring a CEO with experience in various industries.
This statement satisfies 2 out of the 3 reasons for hiring a famous CEO (Strategy 1). Hence, this is a valid answer for column 1.
Quote:
E. When hiring a new CEO, a company needs to ensure that it does not alienate its employees in the process.
This choice talks about "alienation". Again, there's no direct mention of "alienation" in the dataset. And, if we reason this further, "alienation" is not something exclusive to "hiring a famous CEO from outside the company". Although strategy 1 could cause alienation of the company's employees, so could strategy 2. Can we say for sure that if someone is promoted from within, the other employees of the company who felt equally/more qualified won't also feel alienated? Since, this is not an outcome exclusive to either of the two strategies, we can eliminate this as an answer for both columns.
Therefore, the answer to column 1 is Statement D, and the answer for column 2 is Statement B.
Hope this helps.
Happy learning!
-Abhishek