It’s amazing how many people who have been extremely successful in their business careers fail when they get to the CEO chair. The unique responsibilities, challenges, and stresses of the job test even experienced CEOs. Whether someone is a veteran CEO or new to the role, there are ways to get out of the rut and improve performance. Understanding how to balance performance across all departments requires a CEO with broad experience, big-picture vision, and both the knowledge and willingness to perform the actual responsibilities of the job.
Many new CEOs simply do not know what to do, having never been confronted with the variety of issues coming their way. Veteran CEOs sometimes forget the basics or stagnate in the role. This results in negative consequences for both the organization and themselves: CEOs end up paralyzed by fear and indecision, or wallowing in tactical issues, or taking a hands-off approach after they’ve pronounced some grand strategy.
Obviously, the CEO role varies depending on the size and characteristics of the organization. In the smallest of organizations the CEO wears many hats – from individual contributor, to manager, to one-man board. At somewhere between twenty and fifty employees, a company begins to require a systematic approach to management and a full-time CEO role emerges.
Growth is also a key factor in the approach to the CEO role. A one-hundred-person company doubling in revenue every year will present very different demands from a one-thousand-person company that is stagnant. With every new CEO position, even experienced CEOs have to shift their perspective.
Regardless of a company’s size or circumstances, the CEO must understand their proper role to be successful: There are five critical responsibilities that they must fulfill. These relate to the company vision, resources, culture, decision-making, and performance. All CEOs need to know these well and plan their day-to-day activities around them. Even seasoned CEOs may need a reminder of them. It can be easy to forget these roles and allow the fires of the day to hijack the job. But only the CEO can fulfill them. If he or she does not address all five, then the organization is in trouble. Here is a closer look at all five roles.
Vision: A key role is to own the vision of the company. While others may help craft the vision, the CEO must be able to clearly and compellingly communicate the strategy, mission, and vision of the company – where it’s going and why – to all constituents. To ensure that all employees are working in support of the company’s goals, the CEO must make clear to everyone in the organization how the direction impacts their individual roles and daily responsibilities. This is relatively easy in a small company. However, once a company grows to more than about 25 employees, CEOs need a more formal, systematic way to communicate the mission, vision and values to the organization.
Resources: The CEO is also responsible for determining resource needs – most importantly people and capital – and allocating those resources within the company. Providing the right people to the organization in the right positions may be the single most important thing a CEO can do. While all executives manage budgets and allocate resources, only the CEO can make decisions between disparate groups and initiatives relative to their impact on achieving the company’s goals. Being skillful at making these decisions, which are sometimes like comparing apples and oranges, requires a deep understanding of all aspects of the business combined with a clear vision.
Culture: Culture is much more than perks: It’s how things get accomplished in an organization. A values-driven culture is key to high performance. CEOs ignore this at their peril. The CEO must build the culture he or she wants by consistently applying the organization’s values. Employees begin to notice when certain rules only apply to certain individuals or departments. It’s easy to maintain the values when times are good. The difficulty is remaining consistent when the organization hits a rough patch.
Decision-making: The best CEOs are comfortable making decisions with limited information. Decisions are like the oil in an engine: Without timely decisions the business seizes up. This is where many CEOs go wrong: They believe they have to be the expert at everything and have all information before making a call. This is nearly impossible, especially in today’s complex environments where specialized knowledge is required in every department. Failing to make a decision in a timely manner is just as bad, if not worse, than making a bad decision: It can be the equivalent to the CEO fiddling while the organization burns. Often, the CEO is the only one who can make a decision, especially if a problem or opportunity impacts multiple departments.
Performance: Everyone realizes that the CEO is ultimately responsible for the performance of the company, but CEOs need to actively drive that performance. This means working with the other executives to set goals as well as metrics and consistently measuring progress towards them. To be good at this requires maintaining an awareness of the industry and market. Performance in a competitive business environment is relative. The CEO is often the only person in a position to understand how external changes and developments impact the organization. Regardless of the circumstances, the stakeholders, or the size or type of business, the CEO must set the standard for the performance he expects the organization to achieve. Having a formal system for monitoring performance is vital for maximizing performance.
The CEO’s job sounds almost easy with just five things to worry about, but if the CEO does not perform these roles, no one else will. Of course, there are countless tasks that take up a CEO’s time, such as emails, meetings, and public appearances. It can be easy to sit back and deal with the job minute by minute; there will always be tactical things that can be done. Successful CEOs plan how they will spend their time in order to focus on the important responsibilities, not just put out fires. To improve performance, the CEO must focus on how to fulfill the responsibilities that are his alone, how to prioritize them, and how to find balance when they are bombarded with the daily issues that arise.
Joel Trammell is author of The CEO Tightrope (September 2014), and CEO of Khorus, which provides business management software for executives. His leadership as a CEO has resulted in successful nine-figure acquisitions by two Fortune 500 companies.
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