How much does a companys success depend on its CEO? Many corporate co

Question

How much does a company’s success depend on its CEO? Many corporate consultants claim that CEOs are extremely important and deserve great financial compensation. However, consultants who win big pay packages for their CEO clients are often rewarded with further, lucrative consulting contracts. Several independent experts who have statistically analyzed corporate performance have concluded that individual CEOs usually have a minor impact.

A number of scholars argue that most corporate employees feel more allegiance to small groups of co-workers than to their corporation as a whole, so  the CEO’s power to affect morale  and performance, while strong within the immediate team of top executives, rapidly diminishes beyond that team. This would suggest that most power to influence corporate performance resides with middle managers, who interact directly with a greater number of employees. However, if middle managers see CEOs receiving disproportionate rewards, their loyalty to the corporation may be strained. Thus, reducing CEOs’ compensation could actually improve corporate performance.

Some business analysts note that in competitive high-tech industries where choices about which new products to develop are crucial and difficult, CEOs impact performance more strongly, since they are responsible for these choices. However, this does not imply that most CEOs in these industries deserve vast compensation, for their choices yield disastrous consequences at least as often as they do positive ones.
   1 
 1. To support the main conclusion of the passage as a whole, each paragraph in the passage

A. mentions the views of authorities presumed to have studied how CEOs can affect corporate performance
B. presents a factor that allegedly influences how CEOs are viewed by their corporations’ employees
C. describes circumstances under which CEOs can have a significant effect on employee performance
D. discusses one or more elements of corporate structure that determines the degree to which CEOs can affect corporate performance
E. illustrates how CEO compensation can create counterproductive incentives within corporations

2 
 2. In the context of the passage, what is the primary function of the discussion in the second paragraph of the CEO’s power to influence morale (see highlighted text)?

A. It helps explain why most corporate employees feel more allegiance to small groups of co-workers than to their corporation as a whole.
B. It states a conclusion that the statistical analysis mentioned in first paragraph is intended to refute.
C. It provides an example of the means by which CEOs can substantially influence whether a corporation succeeds.
D. It helps justify a recommendation regarding financial compensation that was made in the first paragraph.
E. It is intended to support a hypothesis regarding which individuals have the greatest influence on corporate performance.

3 
 3. The main purpose of the passage as a whole is to call into question

A. the idea that CEOs’ influence on corporate performance merits vast compensation
B. the motives of those who advocate large compensation packages for CEOs
C. the notion that CEOs can positively influence corporate performance
D. the position advocated by most business analysts regarding the efficacy of CEOs
E. the view that most corporate employees feel allegiance to their corporation or its CEO

GMATNinja · Accepted Answer

Question 1 
 
Question 1 asks for something that EACH paragraph does to support the author's overall conclusion. That means that we should be able to identify an argumentative strategy that occurs in  all three paragraphs .

Starting with (A):

Are authorities mentioned in each paragraph? In paragraph 1, the author gives us the views of both corporate consultants and independent experts -- so that certainly meets the bar. In paragraph 2, we hear from a "number of scholars." And in paragraph 3, the author brings in the view of "business analysts."

Clearly, we get the views of authorities presumed to have studied how CEOs can affect corporate performance in every paragraph, so (A) is looking good.

Compare that to (D):

Where is the link between corporate structure and the degree of CEO influence discussed? In paragraph 2, we learn about one element of corporate structure: direct interaction between managers and employees. This structure is brought up to show that CEO's don't have much influence beyond the very top level.

In paragraph 3, you have to stretch a bit to find a link to corporate structure. In that paragraph, the author brings up a particular industry in which CEOs make crucial decisions and have a lot of influence on corporate performance. Is this something to do with "corporate structure?" Eh, maybe if you squint hard at it.

The real trouble comes in paragraph 1, where structure isn't mentioned at all. We just get two opposing views -- consultants think that CEOs are important, independent experts disagree -- with no link at all between these views and corporate structure.

Because each paragraph doesn't talk about corporate structure, we can eliminate (D).

(A) is the correct answer to question 1.

I hope that helps!

cosmic_matters1 · Answer

Please describe question no 2

Amit700 · Answer

E. It is intended to support a hypothesis regarding which individuals have the greatest influence on corporate performance.
This means: that only the CEO does not influence corporate performance. all other individuals are responsible.

Vikasbadami · Answer

How do I eliminate option D in question 1? I was stuck between D and A

avinashnc · Answer

D. discusses one or more elements of corporate structure that  determines the degree to which CEOs can affect corporate performance.

Author clearly states that the following :

''A number of scholars argue that most corporate employees feel more  allegiance to small groups of co-workers  than to their corporation as a whole, so the CEO’s power to affect morale and performance,  while strong within the immediate team of top executives, rapidly diminishes beyond that team.''

Aryan19852 · Answer

Can anyone explain 3rd question I marked C option which was wrong aren't A and C similae

Sajjad1994 · Answer

Explanation

3. The main purpose of the passage as a whole is to call into question

Explanation

A.   This option aligns closely with the main purpose of the passage. The passage presents arguments suggesting that the influence of CEOs on corporate performance may not be as significant as often claimed. It questions the justification for vast compensation packages awarded to CEOs based on their perceived impact on corporate success.

B.  While the passage discusses the lucrative consulting contracts awarded to consultants who secure big pay packages for CEOs, it does not primarily focus on questioning the motives of these advocates. The main focus is on examining the actual influence of CEOs on corporate performance rather than the motives of those advocating for large compensation.

C.  The passage does not entirely refute the idea that CEOs can positively influence corporate performance. It acknowledges that CEOs may have an impact, particularly in competitive high-tech industries where choices about new products are crucial. However, it questions whether this influence justifies vast compensation and suggests that their impact may be overestimated in other contexts.

D.  The passage presents various perspectives, including those of corporate consultants, independent experts, scholars, and business analysts. It does not focus solely on challenging the position advocated by most business analysts. Rather, it presents a nuanced discussion of different viewpoints regarding the influence of CEOs on corporate performance.

E.  While the passage briefly discusses the allegiance of corporate employees to small groups of co-workers rather than the corporation as a whole, it does not primarily aim to call into question this view. The main focus is on examining the influence of CEOs on corporate performance and the justification for their compensation.

Answer: A

SergejK · Answer

Question 3: The main purpose of the passage as a whole is to call into question ...
A. the idea that CEOs’ influence on corporate performance merits vast compensation
B. the motives of those who advocate large compensation packages for CEOs
C. the notion that CEOs can positively influence corporate performance
D. the position advocated by most business analysts regarding the efficacy of CEOs
E. the view that most corporate employees feel allegiance to their corporation or its CEO

If one realises that there is  author's conclusion  presented in the third paragraph, it's actually pretty easy to answer. The conclusion is that  "this does not imply that most CEOs in these industries deserve vast compensation" . So the author takes a position what specific information does not imply, hence providing a conclusion by presenting her own interpretation of the fact that even if CEOs sometimes make great decisions, they sometimes make devastating mistakes. This in turn does not warrant the high pay they receive.

Now, we can actually discard all answer choices without problem except of A and C. With our understanding for the conclusion, we have the main point of the passage, which only allows for A to be correct, as through our conclusion we see that the author questions whether CEOs performance merits the high pay. C is incorrect as it not fully presents author's view of the CEOs performance. In third paragraph author even admits that CEOs sometimes hit the jackpot, so that at times (by chance or through good performance is not stated) they influence positively the development of the company.

SergejK · Answer

Question 1. To support the main conclusion of the passage as a whole, each paragraph in the passage A. mentions the views of authorities presumed to have studied how CEOs can affect corporate performance B. presents a factor that allegedly influences how CEOs are viewed by their corporations’ employees C. describes circumstances under which CEOs can have a significant effect on employee performance D. discusses one or more elements of corporate structure that determines the degree to which CEOs can affect corporate performance E. illustrates how CEO compensation can create counterproductive incentives within corporations The problem with this question is that it wants to know about what is common in this passage in each paragraph and when first reading the passage, we see that some aspects of CEOs are analysed and different results from studies are presented. Now, if one reads question A, that talks about authorities , one will most likely discard this answer choice if one does not read the answer choice until the end. After all, we are looking for some sort of critique that is mentioned in all 2 paragraphs. Reading choice D superficially, one is inclined to choose it. For one, it doesn't talk about authorities

and then the abilities of the CEO are questioned. However, looking at A more thoroughly, we see that it talks about authorities that have studied something . What exactly: how CEOs can affect corporate performance. Choice D on the other hand is wrong as there is a specific mentioned that is only present in 2nd paragraph: one or more elements of corporate structure. If one would have read the passage actively and defined at the beginning the functions of each paragraph, choice D would not have been that attractive. This is a common trick that I encounter when solving tougher GMAT verbal passages. We usually have a specific definition for the word authority, that defines authority as people with power. The other definition is to be an authority in a specific field. If one only considers the first meaning, chance are high that the choice will be discarded. Happened to me.

Prak0709 · Answer

Why cant E be the solution to Q1 ?

guddo · Answer

1. To support the main conclusion of the passage as a whole, each paragraph in the passage

A. mentions the views of authorities presumed to have studied how CEOs can affect corporate performance
B. presents a factor that allegedly influences how CEOs are viewed by their corporations’ employees
C. describes circumstances under which CEOs can have a significant effect on employee performance
D. discusses one or more elements of corporate structure that determines the degree to which CEOs can affect corporate performance
E. illustrates how CEO compensation can create counterproductive incentives within corporations

Answer: A

Each paragraph supports the passage’s overall conclusion by citing the judgments of people presented as having expertise on the CEO performance link:

Paragraph 1 contrasts consultants’ claims with independent statistical analysts.

Paragraph 2 cites scholars about where influence actually sits in a firm and how pay can affect loyalty.

Paragraph 3 cites business analysts about a special case (high tech) and explains why that still does not justify huge CEO pay.

guddo · Answer

1. To support the main conclusion of the passage as a whole,  each  paragraph in the passage
 
E fails because it is not true for  each  paragraph.

Only paragraph 2 talks about CEO compensation creating counterproductive incentives (middle managers’ loyalty being strained). Paragraph 1 is about conflicting claims and evidence on CEO impact, and paragraph 3 is about high tech decision making and why impact there still does not justify huge pay. Neither of those is mainly about incentives created by compensation.

Shubham2599jain · Answer

Please explain the rationale for question 2

guddo · Answer

2. In the context of the passage, what is the primary function of the discussion in the second paragraph of the CEO’s power to influence morale (see highlighted text)?

A. It helps explain why most corporate employees feel more allegiance to small groups of co-workers than to their corporation as a whole.
B. It states a conclusion that the statistical analysis mentioned in first paragraph is intended to refute.
C. It provides an example of the means by which CEOs can substantially influence whether a corporation succeeds.
D. It helps justify a recommendation regarding financial compensation that was made in the first paragraph.
E. It is intended to support a hypothesis regarding which individuals have the greatest influence on corporate performance.

E is correct.

E says: “It is intended to support a hypothesis regarding which individuals have the greatest influence on corporate performance.”

That is exactly what the highlighted discussion does. The scholars’ hypothesis is that CEOs have limited reach beyond the top executive team, so most influence over morale and performance lies with middle managers. The highlighted point explains the mechanism behind that hypothesis: the CEO’s ability to affect morale is strong only within the small top team and rapidly weakens beyond it, which supports the claim that middle managers (who interact with many more employees) have the greatest overall influence on corporate performance.

kartickdey · Answer

Do you want to mean that by "individuals" the option E has referred to middle managers?

guddo · Answer

Yes, exactly. In option E, “which individuals have the greatest influence on corporate performance” refers to  middle managers  in the scholars’ view, not CEOs. The highlighted discussion explains why CEOs’ influence is limited (strong only at the top) and thereby supports the hypothesis that middle managers are the ones with the greatest overall impact on performance.

How much does a companys success depend on its CEO? Many corporate co

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Reading Comprehension (RC) Questions

How much does a companys success depend on its CEO? Many corporate co

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards