Observing chief executives in action has been part and parcel of my working life for good many years. My roles in both general management and management consulting gave me the opportunity to observe number of new chief executives. Sometimes they are successful and other times they are not. Either way, I have noticed some general themes that consistently show up when new CEO does well.
1) Find the talent There is clear difference in outcomes if the new CEO focuses first on getting the right people in place before ploughing ahead with new strategies and plans. Effective CEOs spend significant time reviewing the people already in the organisation and identifying ‘talent’. They don’t just focus on the top team. They look for key people throughout the organisation. Once identified they often give these people more challenging and responsible roles.
2) Remove barriers Conversely, they identify people who are barriers to progress and either remove them or move them sideways. Individuals who don’t contribute value to an organisation do, unfortunately, exist. Successful new CEOs ask people to face up to the challenge.
3) Get the vision right Soon after their appointment, successful new CEOs come up with clear and simple picture of what everyone is there for. John Kotter’s book What Leaders Really Do explains why the early presentation of strategic vision is so important. He describes group picnicking in field. The leader glances skyward and warns: “It looks like it’s going to rain heavily. Let’s go shelter under that tree over there.” You’ve guessed it. Each person takes look, picks up their meal and moves quickly over to the tree to continue the picnic in safety and comfort. The leader has painted the picture. The individuals are empowered to make their choice about what to do.
4)Understand the business The successful new CEO takes time early on to connect and communicate with wide range of people. They naturally build relationships with their management team. Really effective CEOs get out and meet people at all levels. It helps them get handle on what is going on in the business, provides real understanding of how it works and identifies the key issues. The process builds credibility for the new CEO and generates trust. It also helps the CEO identify priorities for later action.
5) Understand the bottom line Like it or not, the bottom line is vital to any and every business. Be as creative and innovative as you like, but unless the business is making money you won’t be around for long. Successful CEOs don’t get caught up in the financial detail. They quickly compare the profit and loss statements and balance sheets of previous years and identify the stand-out issues and trends. Then they ask questions that get people thinking and engaged in dialogue about the business; strengths and weaknesses. All the strong CEOs I have observed demonstrated an absolute understanding of the key financial drivers for their organisation.
6) Understand measures affecting the whole business Financial measures are clearly important. But successful CEOs also focus on understanding the underlying data that indicates performance in relation to customers, production/operations, and the organisation’s people. They embrace the financial measures but also identify and review measures affecting the whole business and not just the money.
7) Ensure costs are under control Businesses that grow, develop and are successful tend to loosen their spending controls. This can add value but, it can also become non-productive and costly. Successful new CEOs understand this and quickly get their heads around where spending is effective and where it is not. Handled properly this discipline builds culture that focuses on ongoing improvement. But be careful: managing solely for low cost can have dire long-term consequences.
8) Develop first-rate business plan Having got the pieces in place, effective new CEOs make sure there is clear road map for everyone in the organisation to follow. It is called business plan. This is the bread and butter of management. The differentiator for successful new CEOs is that they make sure each manager’s plan is peer reviewed by other managers. This can be challenging and needs to be carefully handled to ensure it is positive rather than damaging. The discussion and debate delivers ongoing learning across the management structure, increases team ownership of plans and, increases innovation and the generation of new ideas.
9) Provide feedback on outcomes Successful new CEOs make sure key groups in the organisation get full and open feedback on outcomes. The board gets full summaries of progress against the strategic and business plans which enables directors to carry out their governance role. Effective CEOs make sure the management team receives accurate information on the business’ key performance indicators and that this is regularly discussed and reviewed. Finally, and most importantly, they make sure everyone working for the organisation has access to information. That transparency lets them see how the business is going against agreed plans and how they personally are contributing. It also empowers individuals to identify and act to keep the plans on track. And it creates strong sense of ownership and engagement, both of which are vital to ongoing organisational success.
10) Manage people for performance and development Successful new CEOs implement and maintain an effective performance management process linking individuals to the business plan. Performance management meetings are held monthly and focus on identifying what is going well or not so well for the person. This more coaching-based culture delivers behaviour that leads to continuous learning and change. It also provides forum for identifying individual development needs which in turn leads to building organisational capability. Most of all, it delivers individual recognition which is critical ingredient in building long-term engagement.
11) Ensure systems are in place to support the business Once new CEOs have got to grips with their role and the organisation, they spend time making sure the right systems are in place to support the business plan and strategy. This is an essential success ingredient in today’s IT and knowledge-based world. Successful CEOs show they have good grip on modern technology and the opportunities it provides when delivering the right information to the right place at the right time.
Successful new CEOs demonstrate personal behaviour that acts as role model for the organisation and is aligned with the 11 themes identified. They also reveal an underlying desire to provide individuals with sense of ownership of the business at personal level that creates an environment which is both engaging and challenging.
Kevin Gaunt is chief executive NZIM Northern Region and regular contributor to NZ Management.
