On Becoming an Effective and Enduring CEO

"Oh yeah, I definitely feel out of my depth atmembers on their knowledge of the charter and
times. But I think that if you don't occasionally feelanswers will provide your first clue.Q. Do board
out of your depth you're either not growingmembers seem "tenured" or do board members
anymore, or you're kidding yourself, or you're notchange according to the skill mix needs of the
pushing the organization hard enough." Commentorganization's life-cycle?A. Very easy to see how
in Unlimited from Grainne Troute - CEOlong each board member has continuously served
McDonalds. Grainne has an HR background.Potentialand whether board members have to retire by
CEO's come from a much wider range ofrotation and offer themselves for re-election, and
business disciplines than even five years ago andwhether after say two terms they have to stand
perhaps CEO applicants can benefit from mydown for one complete term.Q. Does the Board
real-world, in-the-trenches questions andgo through a formal evaluation process?
experiences on both sides of the CEO fence. IfWhole Board?
you have had a career largely in one discipline toChairman?
this point then these questions will enable you toIndividual Board members?A. If not, why not?
think of the CEO role in broader terms.Questions,Perhaps it has never occurred to them, perhaps
many of which are in the considered "soft" areas,the Board is too new or perhaps it is considered
have potential answers that will help you make atoo threatening by individual Board members.Q.
balanced decision as to whether your potentialWhat are the sacred cows?A. I am pleased to
career move will be a good fit, and if so, increasereport that in most cases there are none.
your chances for success in the role.However, understand whether there are any
The alternative?I describe it as thesacred business processes, unprofitable/low-profit
"eighteen-month club." You are hired, the boardcustomers you are "requested" to retain, or any
has great expectations on sales and profituntouchable personnel.Q. Why did they consider
growth..... you make the right noises, six monthsmaking the job offer to you?A. Job descriptions
go by, twelve months and the board startsare broad and so what specifically out of your
questioning "Where are the results?" and bybackground is it that they think you will do?Were
eighteen months you are in the departure loungethey looking for a celebrity CEO, someone who
along with 15-20% of the CEO's from the Fortunewill build a leadership team, a consensus builder or
1,000. You have joined the eighteen-month club!Sosomeone who will drive change? Roles are broadly
it is time to start probing:Q What stage in thecharacterised as growth navigators; execution
business life-cycle is the organization in?Initialmaestros; turnaround surgeons or business model
high-growth; maturity; decline or the start of thetransformers.Do you think they will want you
2nd growth cycle? Is there widespread recognitionover the longer term, or will they transition to
and acceptance by individual board members ofsomeone else once their initial goal with you is
the life-cycle stage?Q. Does the companymet?Q. Have they structured your proposed
strategy have a long-term sustainable competitivecompensation package for growth or stability? Do
advantage? How do you know?A. Instead of justthey want you for the long term?A. An easy
relying on information provided, have youway to determine the answer to the first
completed a S.W.O.T? Talked to customers andquestion is to look at what percentage of the
ex-customers? Talked to competitors? Searchedpackage is at risk? Twenty to thirty percent
the internet? Found industry trend information?probably means that they are looking for high
Looked at benchmarked data?Q. Has the businessgrowth. That said; make sure you can control all
model passed its "use-by" date?Aggregators,KPI's. For example if there is a percentage related
e-commerce, new competitors or technologyto EBITDA growth and you are in a service
may all have had a major negative impact on thebusiness will they let you change staffing ratios to
business. Does the board truly recognise it or areimprove profitability?A balanced approach is to
they still in denial and in the mode of trying toweight a portion for sales and customer growth,
make a silk purse out of a sow's ear?Have theynet profit improvement, plus a percentage for
considered a Greenfields approach to thebusiness reinvestment. BP is the best example of
development of a business plan?"If I were startingthis balanced approach to senior executive
the business today would we do business thecompensationQ. Is there a stock option
same way?"If not, then the board should havecomponent?A. How will it be triggered? After
directed the development of a business planKPI's are achieved, after a set time period, or at
recognising: industry trends, new technology,the discretion of the board? Are they just holding
competitors, factors impacting on the businessout a "future promise" or is it a genuine offer?
model, geographic factors related to sales andWhat is their track record in this area?Q. Finally,
support and traditional and non-traditionalwhat is the board attitude to people? Do they
competitors. e.g., in the check printing businesshave a view that "people are our most important
considering the impact of credit and smartasset" or do they view staff as a "cost of
cards.Q. Has the board gone through thebusiness" or some point in between. Do they
cost-cutting phase, or are they locked intobelieve in investing in people?A. Unless you have
ongoing cost-cutting?A. No-one ever downsized tothe ability to hire, motivate and retain the
greatness. During the process of downsizing truststrongest team then the business is likely to
and morale typically are destroyed. Unless theremain a "me too" company with higher than
board is focussed on re-growth strategies and notaverage staff turnover usually accompanied by
further cost-cutting, then I would suggest thatlow customer satisfaction.This implies the right
your tenure will be short-lived as you will not beculture, values and at least being in the top one
demonstrating additional profit from new businessthird in compensation bands for your industry.The
acquisition.Q. Is the board focussed on the shortfirst 103-daysThis is the most critical time
or long-term?While the board may talk aboutfollowing your appointment and certainly sets the
being "in it for the long-haul" look at whatfuture culture under your regime. Clearly before
shareholders and board members have done inyou start your new role, and with your now good
other situations. Are they long-term players orknowledge of the company time should be spent
typically just looking for a quick return?Q. Willon your Action Plan for the first 90 days at
there be a business reinvestment strategy or isleast.This plan will include further fact-finding,
there a single-minded focus on shareholder returnsmeeting personnel, understanding production and
right now?A. To this point there may not havedistribution processes or service offerings,
been calls to reinvest in the business. A leadingmeeting both current and former customers or
question to ask then is: "What has been theirclients and suppliers. Good information on which to
track record either in this or other businessbase your plan.However, do not underestimate
interests?"Q. Is it a public or private company?Ifthe need to create a support network and build a
private, who are the key shareholders? It iscoalition around your strategy and implementation
important to meet one-on-one with each of themplans. No single person can successfully grow a
to consider such things as:business. Identify and groom your motivated
- is there a dominant personality?torch-carriers.Conclusion:Your success as a CEO is
- will they let the chair do their job?not totally dependant on positive answers to
- has the board been "stacked" or are there thethese questions.In addition to being experienced,
right disciplines to take the company forward?well-educated and intelligent and articulate you
- will directors do what is right for the company,must have the ability to inspire others.This
or dosome board members pursue personalinvolves a highly developed social quotient to
agendas?move quickly and successfully in a complex,
- will primary shareholders continuallymulti-layered and fast-paced environment. So it is
second-guess theCEO by calling in regularly atnow time to hone your skills of empathy,
offices or taking staff tosocial events etc?integrity, stamina and flexibility in a variety of
- Is the owner or dominant shareholder anbusiness and social situations.After all, you must
entrepreneur?Typically they are short-termbecome the passionate torch-carrier for your new
players, not interested somuch in planning andorganization.Denis Orme Founder Performance
have a "Do it - fix it" mindset.Q. Does the boardLeader of the Leadership Success Institute, he
truly understand their role?A. My experience withhas been heavily recruited by start-up businesses
private corporations in particular is that the boardthrough to Fortune 500 companies to analyze
does not stick to strategy design, and thenoperations, develop and implement change
evaluate the CEO on his or her execution of thatmanagement and repositioning strategies, and
strategy. Too much time is spent debatingreturn organizations to sustainable profitable
operations. This discussion does little to ensure thelong-term growth.Cited in Who's Who in Emerging
long-term profitable operation and marketLeaders, Who's Who in Sales and Marketing and
superiority of the business. Again, using myWho's Who in Industry and Commerce.
experience this is not such a factor in publicHe has received leadership awards from the
corporations.Q. Governance charter.... Is it just aAmerican Lung Association, Business Volunteers
wall-hanging, or a code they live by?A. Quiz boardfor the Arts and the Greater Houston Partnership.