Grading CEOs After the Pay Window Closes

Merry Christmas, y’all, from Austin By God Texas where it is cold and gray.

So, several years ago, a CEO who I had advised for a few years and who had taken his company to the pay window asked me, “What kind of a CEO was I?”

He didn’t mean in a Performance Appraisal way, but more as a final, historic debrief of his entire tenure. [His bank account suggested he’d been a good CEO.]

It was an easy conversation because the guy was crackerjack and I told him so.

The conversation went on and he wanted to know, “How did I develop along the way?”

That was a deeper conversation and I agreed to go back and consult my notes rather than give him a saccharine, off-the-cuff, in-the-light-emanating-from-the-pay-window reply.

When I did consult my notes, we had a very useful conversation: useful to him because it validated some things he was thinking, and useful to me because I had a good chance to see what impact I might have had on his journey.

We both came away with several observations:

 1. To be a good CEO — let’s define “good” as having something to do with delivering financial value in front of the pay window — you have to develop.

Writers will tell you that the protagonist, the hero in a novel, is the character who develops the most during the arc of the story.

Good CEOs develop, measurably and substantially. If you are a CEO and don’t feel like you’re getting better at it, take note.

 2. A good CEO creates process. Sometimes, it is very simple things like checklists.

This particular CEO encountered a problem with sales that was solved completely by creating a sales process diagram, finding the choke points (it was him most of the time, because the customers wanted to cut their deal with the boss), creating a score keeping metric (pipeline report), rewarding the winners/performers, and cutting loose those whose numbers didn’t work.

Once the sales graphic was made, briefed to the company, the sales problem disappeared. It took work, but it was easy work.

Thereafter, that company ran its sales operation in accordance with graphic, kept score, and graded based on outcomes.

Are you creating processes that streamline operations?

 3. A good CEO builds a team that is complementary, does not overlap, and that pays attention to conflict and friction.

The power of an aligned team requires the strategy, tactics, and objectives to be clear, assigned, and scored.

At all times, a good CEO has to evaluate who is contributing energy and who is sucking energy out of the team.

The Energy Source v the Energy Sink Theory of Life

CEO Shoptalk — Energy

4. A good CEO is a constant communicator. Inferior CEOs are always poor communicators. This is compounded when they haven’t done the hard work to create strategic (company), tactical (departmental), and personal objectives.

The mantra for a CEO has to be the VISION for the company. The Vision belongs solely to the CEO. It is his and he has to drum it into the team.

 5. A good CEO seeds the company culture with his own values, lives those values, communicates those values, sells those values during onboarding, and then lets them and the culture go.

A mature company culture doesn’t exist until the values are owned by the company rather than the CEO.

 6. A good CEO is in contact. One of the things you learn in the military at the lowest level is to “lead from the front.”

The power of reconnaissance — eyeballs on the market, the enemy — is essential whether you are a Lieutenant General commanding a corps or a platoon leader commanding 50 men.

Good CEOs manage by “wandering around,” thereby taking constant measurements of the sense of how things are going, the morale of the organization, and the direction of the effort.

The best CEOs are good listeners. This is such an easy skill to develop.

 7. A good CEO runs a good board admin function, never allowing the administration of the relationship to color the satisfaction of the board members on an individual or collective basis.

If your board packet is late, the board is going to be irked and that vexation — that negative energy — doesn’t go away. It shows up at the board meeting.

Pro tip: this is all just about process and a checklist.

 8. A good CEO appraises performance and compensates excellent performance at the same time as the performance appraisal.

An orderly performance appraisal system alerts the under-performers while gratifying the performers. It quickens the pace of a company.

 9. A good CEO develops The Feel for the heartbeat of the product, the market, the company, the people.

I wrote about this the other day and I am convinced more than ever that this is part of the secret sauce, maybe the key ingredient.

Some CEOs just have it naturally. It is part of leadership, but it is something more, maybe empathy.

The Feel For Running a Business

 10. A good CEO hires good people — constantly looking for talent — and lets them do their job while keeping them accountable.

I once got a call from an executive to report one of our buildings was on fire. I had been watching it on the Ten O’Clock News waiting for this call. I was pleased when I got it.

He reported that the building was on fire. “OK,” I said. I purposely didn’t say anything else.

When the phone was mute for a long time, I said, “Who’s in charge of that office building?”

“I am,” he said.

“OK, let me know what happens. You have full authority to do whatever needs to be done. I’m going to bed.”

In that moment, my natural reaction would have been to throw my clothes on, drive down to the building — at the corner of Sixth and Congress in Austin — and take control.

But, I had hired this guy, trained this guy, and given this guy the authority to manage those assets. Now, we had our test — was it real? I made it real and the guy took control.

So, I stayed home. I went to bed. The next morning we spoke and he had done everything perfect. He said it was a damn good experience to run the show.

But, there was a huge dividend. Later, when I went down for 18 months with hepatitis this man ran the company. Flawlessly. His name was on the continuity chart to take over if I went down. It worked like a charm. I think his management of that disastrous fire was the key to his embracing the leadership that would later be so critical to the company’s survival.

I promised myself I would limit my list to ten things, so I am stopping now.

One thing that was gratifying to me was the CEO’s recognition that our relationship had contributed to his success in a number of different ways, most importantly that it gave him someone (who was not a board member and thereby could not fire him) in which to confide, someone to vent with, someone to act as a sounding board, and someone who had trod that same path for 33 years.

In the end, any CEO is only going to be as good as they want and work to be. Getting “good” is hard work.

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car. Merry Christmas.