BY MARK FAGAN
Over the course of this eight-part series, I have written about how a CEO can more effectively run and grow a business. My premise is that a CEO”™s ability to manage is the most influential factor in determining whether an organization will achieve sustained growth and profitability.
In a nutshell, the CEO is responsible for setting strategy and vision. The CEO ultimately sets the direction, leads the company. Which markets will the company enter? With what product lines, and against which competitors? How will the company differentiate itself?
What happens all too often is that CEOs take on or assist in the responsibilities and tasks that should fall to their subordinates. Why? The company might not have a certain position filled, the position might be filled by someone not qualified to accomplish the requisite tasks, or the CEO might be unsure of how to remove him or herself from day-to-day duties. Whatever the reason, it still comes down to the CEO not adequately fulfilling his or her job responsibilities.
Now let”™s be practical: Most small and midsize businesses may not have the bandwidth for their CEO to devote 100 percent of his or her time to the traditional responsibilities of a chief executive.
The list of responsibilities is daunting, and whether they are met head on is critical to the company”™s success. The more time a CEO spends on day-to-day or tactical, activities, the less time he or she has for higher-level activities.
That sort of negligence may not catch up with a company overnight (whereas a company would immediately feel the effects of neglecting certain day-to-day responsibilities) but a lack of focus on long-term strategy and goals will eventually become evident in the company”™s performance compared with its peers.
Ironically, one of the most critical jobs of a CEO is to find a way to allow yourself, as CEO, to perform your designated responsibilities. I have tried to offer some ideas and tools to help accomplish this. Some of those things I have discussed in the CEO Evolution series include:
Managing your business through business drivers: The CEO should identify the six to eight key factors that have a major impact on your business. Many of these business drivers cross industry lines, but there are others that are specific to your industry, and may not be conspicuous. A good place to find key business drivers by industry is www.ibisworld.com.
Developing a business driver reporting system: Those key business drivers should be reported by each operating segment using a simple and clean format and at regular intervals (monthly, quarterly, etc.). The important messages will be lost if they are buried in a 20-page report crammed with statistics. Standardize the report by culling out acquisitions and other one-time events. This reporting system can cover both operating and non-operating data, such as information on how your employees are spending their time at work.
Embracing a culture of accountability: Implementing a corporate strategy requires buy-in from your management team and the creation of a culture of accountability across your entire organization. You should identify areas where the company is strongest and other areas that need improvement. Most important, show management and employees what will happen if those key business drivers are improved upon and how that will lead to rewards such as increased compensation. Creating a culture of accountability takes time, requires consistency and discipline, and must originate from and be maintained by the CEO.
As CEO, your primary function is that of a leader. Your management team and employees will look for messages being sent by their CEO, and those messages will affect their behavior and how they conduct business for you. Therefore, all of your decisions should be towards the achievement of the company”™s short- and long-term goals.
Also, let your management team manage. Let them make mistakes and learn from their mistakes. This will allow you to remove yourself from most of the tactical duties and to execute those long-term goals, like making acquisitions, going international, or getting into a new market.
Finally, make sure you know what you are good at and consider having someone else do the other stuff. I was at a recent presentation by an executive of a well-known company in the food business. The company has sales in the hundreds of millions of dollars and employs less than 50 people. How? They outsource all their non-core business.
So there it is. In the words of Donald Trump, “As long as you”™re going to be thinking anyway, think big.”
Mark L. Fagan, CPA, is the managing partner of Citrin Cooperman”™s Connecticut office. He can be reached at mfagan@citrincooperman.com or (203) 847-4068.
