“Chief executive officer (CEO) based Frequently Asked Questions by expert members with experience in CEO. These questions and answers will help you strengthen your technical skills, prepare for the new job test and quickly revise the concepts”
Setting strategy and vision is the main duty of a CEO. The senior management team can help develop strategy. Investors can approve a business plan but the CEO ultimately sets the direction. Which markets will the company enter? Against which competitors? With what product lines? How will the company differentiate itself? The CEO decides sets budgets, forms partnerships and hires a team to steer the company accordingly.
CEO stands for Chief Executive Officer. The role of the CEO will vary from one company to another depending on its size and organization. There are various other titles for the position of CEO including president and executive or managing director.
We all feel a touch of awe when someone has it, the CEO title. The power, the salary and the chance to be the boss. It is worthy of awe.
Too bad so few CEOs are good at what they do. In fact, only 1 in 20 are in the top 5%[1]. Many do not know what their job should be and few of those can pull it off well. The job is simple very simple. But it is not easy at all. What is a CEO's job?
More than with any other job, the responsibilities of a CEO diverge from the duties and the measurement.
The CEO's duties are what they actually do, the responsibilities they do not delegate. Some things can not be delegated. Creating culture, building the senior management team, financing road shows and indeed, the delegation itself can be done only by the CEO.
Responsibilities of CEO:
Everything, especially in a startup. The CEO is responsible for the success or failure of the company. Operations, marketing, strategy, financing, creation of company culture, human resources, hiring, firing, compliance with safety regulations, sales, PR, etc. It all falls on the CEO's shoulders.
Capital allocation is the CEO's fourth main duty. The CEO sets budgets within the firm. They fund projects which support the strategy and ramps down projects which lose money or do not support the strategy. They consider carefully the company's major expenditures and manages the firm's capital. If the company can not use each dollar raised from investors to produce at least $1 of shareholder value, they decide when to return money to the investors. Some CEOs do not consider themselves financial people but at the end of the day, it is their decisions that determine the company's financial fate.
If vision is where the company is going, values tell how the company gets there. Values outline acceptable behavior. The CEO conveys values through actions and reactions to others. Slipping a ship schedule to meet quality levels sends a message of valuing quality. Not over celebrating a team's heroic recovery when they could have avoided a problem altogether sends a message about prevention versus damage control. People take their cues about interpersonal values trust, honesty, openness from CEO's actions as well.
Team-building is the CEO's third duty. The CEO hires, fires and leads the senior management team. They in turn hire, fire and lead the rest of the organization.
The CEO must be able to hire and fire non-performers. They must resolve differences between senior team members and keep them working together in a common direction. They set direction by communicating the strategy and vision of where the company is going. Strategy sets a direction. With clear direction, the team can rally together and make it happen.
Example:
A project team worked weekends launching a multimedia web site on a tight deadline. Their CEO was on holiday when the site launched. They did not call to congratulate the team. To their, it was a matter of keeping their personal life sacred. To the team, it was a message that their personal life was more important than the weekends and evenings they had put in to meet the deadline. Next time, they may not work quite so hard. The emotion and effect on the culture was real, even if it was not what the CEO intended. Congratulations from the CEO on a job well done can motivate a team like nothing else. Silence can demotivate just as quickly.
It is easiest to measure a CEO's capital allocation skill. In fact, financial measures are the ones made public, earnings and share price. But how can a CEO link those to his/her actual decisions? Working with his/her CFO, a CEO can devise financial measures appropriate to his/her business. Sometimes traditional measures are most appropriate, such as economic value added or return on assets (for a capital-intensive company). Other times, the CEO may want to invent business-specific measures, such as return on training dollars, for a company which values state of the art training for employees. By monitoring several such measures, a CEO learns to link his/her budget decisions with company outcomes. Ultimately, the CEO's should be creating more than a dollar of value for every dollar invested in the company. Otherwise, his/her best bet is to return cash to the shareholders for them to invest in more productive vehicles.
Arrogance also threatens a CEO. Because I am CEO, I must know the business better than anyone else. It has been said but it just is not true. No CEO can be an expert in all functional areas. A CEO who is doing his/her job is spending time with the big picture. If he/she knows the details better than his/her employees he/she is either hiring the wrong people or spending his/her time at the wrong levels of the organization. It is appropriate for a CEO to manage operations if absolutely necessary, but he/she should quickly hire good operational managers and return to leading the whole business.
If he/she also comes to believe that the CEO title grants infallibility, watch out. Even the pope is only infallible a couple of times each century. But CEOs can reinforce their delusions of grandeur by giving themselves higher salaries (surely he/she deserves it! After all, salary benchmarks show how underpaid he/she is) and more perks. Then when layoffs come, the CEO wants applause for having the moral strength to make "hard choices," quietly overlooking how his/her own poor decision making led to the need for layoffs.
Unlike inconvenient lower-level jobs, no one tells the Chief Executive how they are doing. Do managers let their know they are undermining their authority, making poor decisions or communicating poorly? Not likely. Even when a CEO asks for honest feedback, the fear is there. Non-flattering feedback may stall a promising career. Even when a company uses 360 degree feedback, no one penalizes the CEO if they do not act on the feedback.
The board of directors supposedly oversees the CEO but they are far removed from day to day actions. Over time, they can evaluate performance but they look mainly at share price and company strategy. They are rarely interested in the CEO's daily behavior.
By measuring their performance based on their duties, a CEO can learn to do their job better. The CEO's job is setting strategy and vision, building culture, leading the senior team and allocating capital. The last of these is easy to measure. The first three are more of a challenge.
Set aside 5 to 10 minutes, daily, to developing as a leader and human being. This will be the time you think about the below topics and set your mind for the day. Schedule the time if necessary. Just make sure that you do what is right for your growth.
Pace yourself. Life is long. Adopt these suggestions one or two at a time, and practice until you make them your own. Then move on. Forcing will not help, this is about developing at your own natural rhythm. Do one assignment for a few weeks, then move on to another. Keep the ones that work for you and drop those that do not.
Culture is built in dozens of ways and the CEO sets the tone. Their every action or inaction send cultural messages. Clothes send signals about how formal the workplace is. Who they talk to signals who is and is not important. How they treat mistakes (feedback or failure?) send signals about risk taking. Who they fire, what they put up with and what they reward shape the culture powerfully.
It is hard. Having vision is not enough that just takes a handful of mushrooms and a vision quest. Communicating the vision is the key. When people get it, they know how their daily job supports the vision. If they can not link their job to the vision, that tells a CEO that his/her communication is faulty or he/she has not helped his/her managers turn the vision into actual tasks. Either way, a CEO can monitor his/her success as a visionary by questioning and listening for employees to link their jobs with the company vision.
Of course, once infallible, there is no more to learn and a CEO may quietly stop learning. Without daily oversight and high quality feedback on how he/she does his/her job, he/she can mistakenly believe his/her actions lead to success. In reality, he/she may be doing the wrong thing but his/her staff may be working around the clock to cover for him/her.
The CEO's second main duty is building culture. Work gets done through people and people are profoundly affected by culture. A lousy place to work can drive away high performers. After all, they have their pick of places to work and a great place to work can attract and retain the very best.
Here are a few ways to stay connected with little people:
☛ Cultivate an attitude of respect, your respect for them
☛ Cultivate an attitude of respect, your respect for them
☛ Share your vision and job with them, from a position of service
The little people are the ones turning your vision into reality. Meditate on this for a few minutes and ask yourself whether you can their jobs as well as they can. If you can, then you are not hiring the right people, go change that. Otherwise, once a day, go talk to one of your low level employees someone more capable than you in their area of expertise and learn from them. Choose a different person each day. Get as close to the front line workers as possible.
Watch the videotape and decide whether or not you would want to work for that person. If the answer is no, learn to chill when you hear bad news.
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