The man who founded the company in his Harvard dorm room in 2004 is now its CEO, chairman of the board and controlling shareholder. In its regulatory filing, Facebook credits Mr. Zuckerberg with the vision to create what has become the largest social network on Earth. But as Facebook changes into a public company, its 27-year-old founder will still have final say over all major decisions, largely unchallengeable by investors or the board of directors.
In my study of organizational behaviour, I have yet to come across one who was considered great who did not also have a significant body count of ex-employees claiming that they were autocratic and mean. Examples include Jack Welch, Steve Jobs, Bill Gates, and Larry Ellison. My theory is that the level of personal demanding needed to drive a global enterprise to a position of world-changing leadership is one that can be too much for some people. Such leaders do not tend to provide much ...view middle of the document...
Zuckerbeg is the youngest member of the board, by about a decade and it is unclear how much influence they will have over the man who founded the company.
Since he founded Facebook eight years ago in a Harvard dorm room, Zuckerberg has methodically consolidated his control over the company. Thanks to his ownership of B shares, Zuckerberg controls 57% of the company’s voting power. Once the company goes public, this structure will allow him to single-handedly decide issues that require a shareholder vote, including board elections and merger decisions. The 27-year-old Zuckerberg even has the right to appoint his own successor (Time. 2012).
The major problem is about moral hazard, or incentives. By curtailing shareholder rights and board accountability, and specifically by splitting share class with drastic differences in voting power, Facebook risks creating two distinct shareholder bases with divergent interests. This, in turn, may and probably will fuel proxy contests and boardroom or family struggles that ultimately will screw common shareholders according to Institutional Shareholder Services (ISS) (Forbes, 2012).
The pros and cons of autocratic leadership are clear for certain situations. For example, emergencies require a strong leader to keep order. However, in less stressful circumstances, it may be better to debate an issue before proceeding. Autocratic leaders may not be good at communication, but they sometimes have the best ideas.
On the other hand, autocratic leaders must take full responsibility for the results. This last part does not usually occur, and this leaves many employees unhappy and feeling undervalued. Therefore, the dynamic of the relationship in the professional environment must change to become more equal. Otherwise, you may a have strong leader with no followers or employees who have no direction.
Agustino Fontevecchia (2012) Zuckerberg A Dictator? ISS Blasts Facebook's 'Autocratic' Governance [online] available from [20 May 2012]
Sam Gustin (2012) Facebook Slammed Again Over Zuckerberg’s ‘Autocratic’ Control [online] available from [20 May 2012]