Business owners: Know what is going on in your company

On Behalf of | Nov 25, 2020 | Business Litigation |

For many California business owners, this might seem like a simple enough matter. After all, the CEO is the one making the big decisions and running the business operations. Therefore, they are aware of what goes on in their company, even if they do have a lot on their plate to manage.

However, it is critical that business owners make sure they have a high-level understanding of how their policies are enforced and how the business operates at all levels, so they can eliminate risks before they have the chance to evolve into much larger legal issues.

Case in point: Apple required to pay back wages

In the resolution of a recent appeal, California courts ruled that massive tech leader Apple must reimburse several employees for lost wages. This was a result of the lawsuit retail employees filed to recover wages for the time during which managers obligated them to stay at work after clocking out for security bag checks – time that totaled an average of more than one hour each week.

These details of the case are not even the biggest issue. The more alarming subject for business owners is that CEO Tim Cook was not aware of this policy managers enforced. He did not know of this policy until employees filed a complaint with him directly.

This is not a new issue

Unfortunately, it is a common risk for important information or issues like this to not reach the CEO or business owner. Inc.com indicates that one of the largest challenges contributing to this risk is the leadership bubble.

In the position of CEO, individuals may feel accountable for everything happening in the business. But in this position of power, some executives, co-workers and employees might only report what they think the CEO would want to hear. In other words, they only report on what is going well.

Business owners must evaluate their positions in relation to their whole company and consider:

  • How does the company culture impact how and what people report to the CEO?
  • How do these issues affect the CEO and the company’s values?
  • Do the policies enforced at all levels comply with the business’s values, as well as state and federal laws?

Taking measures to avoid a leadership bubble and remain informed can help business owners prevent such risks as highlighted in the case involving Apple.

This does not mean that CEOs must be personally involved in the day-to-day operation of their business at all levels. That is nearly impossible to achieve effectively. However, it does mean that business owners must make sure they are aware of the inner workings of their company.

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