Results: you hire your CEO to get them, you fire them if they don’t. How can one assess the execution skills of your CEO? While almost anyone can set a goal (unfortunately some CEOs fail on this task as well, but that’s another story), very few CEOs can align the team in22 the process to achieve a set goal. During a CEO assessment, we would look at many areas, competencies, skills, and experiences, but in this article, we will focus on execution. The dialogue in an interview often centres on setting and achieving goals, however, to winnow the good versus great candidate, one should zero in on the ability of the leader to align all resources on a common approach to achieve the goal.
The board and executive leadership team need to be aligned, not only on what they want to achieve but more importantly how they will achieve it.
A simple example is when a CEO sets the goal to double profits in three years. He has a sales force of 300 people and has three heads of sales for each region, each managing a centurion. Let’s call them Sharon, Jennifer, and Mark. The goal is set, and the three’s direct reports echo the same amount of verve and brio for accomplishing the goal. The CEO leaves the meeting confident that she has done her job and now the company is striving towards its next chapter of success.
Meanwhile, Sharon hires a new product consultant and starts to create a new product series because, in her mind, the best way to achieve the goal is to create new and more attractive products which add net-net new revenue to the P&L and thus pad the bottom line with fresh profits. Jennifer tells her top salespeople to book flights and head to new countries where the company is not yet present, as in her mind the best way to drive profit growth is to add net-net new revenue to the P&L by onboarding new geographies to the client portfolio. Mark calls a meeting with this team and begins to re-visit all their best and oldest clients to look at the share of wallet and cross-selling opportunities that may have been missed. In his mind, the best way to increase profitability is to sell more to their existing client base which he feels is underserviced.
While the CEO set a clear goal, she now has 300 salespeople running in different directions, muddling her execution. Great CEOs will have a sophisticated process for running execution and will work to remove organization inertia and interdepartmental dissonance. Aligning a team to its execution is key to utilizing the company’s resources efficiently. Misallocation of resources can consume precious cash flow, weakening the company. Focusing resources can push the brand to its tipping point, opening a windfall of opportunity once the business has passed its watershed in the market.
This may seem like a no-brainer, but in reality, many CEOs who have a crystal-clear understanding of the objectives, may not be so clear on the process itself. This is especially difficult when they are dealing with board members who have different understandings and opinions about the organization and the direction in which it should move in the future, to increase its revenue.
For example, I can never forget a board meeting with a client of mine who owned a large hotel chain, the CEO was working to bring consensus on the corporate identity but was faced with a litany of opposing opinions: one member pipped up and said: “We are a hotel development company and our strength is our physical assets in premium locations. Our ability to build iconic hotels, is our strength, that is why our customers come to our hotels”. The second bellowed “No we are a hotel management company. Our customers come for the white-glove service they receive. We are the best at managing hotels, we should stop wasting our capital on building assets and start selling our services to other hotel development companies to manage their assets for them”.
A third board member laughed and said “You don’t understand our business at all. It all starts with revenue and that revenue is made online. Our strength is our ability to sell hotel rooms. To fill a hotel with guests through our online sales ability. We are a technology company and we should focus our resources on further developing our software and online capabilities”. The CEO was clearly facing a headwind as currently his capital was deployed across all three initiatives as they were building several new hotels, at the same time pitching to win new hotel management contracts, and thirdly investing in their technology capabilities. It was diluting the company as well as himself. It was a losing proposition that was going to slowly bleed them dry, and over the next three years, they suffered the biggest losses of their forty-year history in the business.
A CEO and a company need a clear sense of identity that will provide a lodestar for the direction and execution of the company’s strategy. The board and executive leadership team need to be aligned not only on what they want to achieve but more importantly how they will achieve it. How can you tell if your candidate does possess the desired execution skills? Simply ask the following telling questions:
1. Describe a time when you set a goal and then realized that several of your team members were going to achieve it in a different way. How did you ensure that they were all using the same approach to achieve the goal?
2. Can you give me an example of a time when the leadership team was divided on the best approach to achieve the company vision and strategy? How did you resolve the issue?
Many CEOs are focused on setting goals but the real magic happens in the execution, and this is where the misalignment may happen, so you want your CEO to make sure that the whole team is approaching the achievement of goals in the same way.
Looking for more questions to ask a CEO? Read “CEO Assessment and Selection” to learn more about the 7 universal success factors for the Chief Executive Officer and unlock over 450 fail-safe questions that allow you to recruit top performers. Get more free CEO Assessment tips at https://tpgleadership.com/ceo-assessment-selection-book/ .
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