Do You Have What It Takes To Be CEO
Search For the Ideal Fit
You may think that there is no such thing as an ideal fit for a specific organizational function. Yet there are certain qualifications, responsibilities, character traits, and measurements of performance that determine the expectations inherent in every position. These generally accepted criteria apply independently of the size or type of business. Listing the generally accepted components that make up the profile of a successful CEO provides a useful checklist.
For a potential CEO, there are certain prerequisites that apply. The person holding this position must have a successful track record of leadership. This is apparent in creative strategic planning, results-oriented organizational structuring, and the ability to motivate staff. In addition, a CEO requires a well-honed understanding and knowledge of the industry and a proven ability to meet revenue and profit objectives. This can be measured from financial ratios such as returns on equity and assets. Past performance is a strong indicator of future contributions.
Furthermore, the CEO must be capable of seizing expansion opportunities to grow revenues and profits. Also, they must be able to establish good governance, assess environmental risks and address societal concerns (ESG).
The argument can be made that some of the most successful companies have leaders that dropped out of college. While this is true in some cases, it is also the exception to the rule. Silicon Valley founders who lead some of the most successful enterprises in the world seek out well-educated managers. An MBA degree helps to understand the inner workings and essential requirements of a business. It establishes a structured way of thinking about different aspects of business management. Small businesses may not be able to hire someone with this type of business education. However, some college-level business schooling should be part of the CEO's credentials. To some degree, education deficits may be compensated by deep managerial experience.
The CEO's responsibilities in a large organization are more complex than those in a small business. It is important to take into account the sales volumes for which the CEO was responsible in the past. The experience span for a CEO is normally ten years or more. Nonetheless, if you have the passion, vision and cutting-edge ideas it may compensate for a lack of profound experience.
In today's rapidly changing, digitally-driven environment, the CEO must have the capability to use the new technology both internally and externally. You cannot just hire an IT specialist and leave it to them to decide on the software and hardware. The CEO requires a good working knowledge of business software such as ERP, EPM, BI, CRM. In addition, presentation skills using PowerPoint and video conferencing are essential for reaching out to employees, shareholders, and customers. Understanding, and skillfully using social network effects is a must. Writing convincing e-mails is especially important for the new generation of leaders.
It is one of the most important responsibilities of the CEO to establish the company's long-range operational goals and objectives. However, it is even more critical that they demonstrate a visionary ability. It involves reaching beyond the historical boundaries set in the past. It entails forming visionary strategies and using new digital marketing techniques to drive the company towards exciting new horizons.
The visionary CEO will not be solely content with strategic goals quantified in percentages of growth in revenues and profits. Their strategic plans will look beyond the status quo and spot other growth possibilities from mergers and acquisitions. No CEO can neglect environmental risks. The primary goals of increasing revenues and profits must be placed in the context of the company's carbon imprint.
Selecting the Team
To become CEO you must be able to take an active role in the selection and appointment of the key management personnel. After the preliminary vetting of key managers, the final decision should be made at the top. It is crucial to set up the proper mechanism for periodic performance reviews for all key management personnel. Tying performance evaluations to a fair and just incentive plan is a sign of a progressive CEO.
Effective communication translates into holding regular management meetings and obtaining feedback and new ideas from the key employees. Group or face-to-face meetings ferret out potential new leaders within the ranks. This allows the CEO to begin the process of selecting a future replacement for their position. They recognize that this is how continuity is assured, and don't fear possible direct competition.
Every business is ultimately dependent on its relationships with customers. The active CEO will provide leadership and direction on the quality of services offered to all customers. They will ensure that standards of excellence in customer service, quality of work, and timely deliveries meet or exceed expectations. Also, that customer information flows to them in regular reports so that they can spot any gaps.
The CEO accepts that all financial agreements, legal matters, long term contracts banking accommodations, consulting arrangements are ultimately their responsibility. Whether these are delegated to others or not, they assiduously review all such undertakings before signing off on them.
No focus of the CEO is as critical as financial controls. While the responsibility is delegated to a financial officer, they must take an active part in establishing policies. This includes controlling short and long term cash flow and reviewing and analyzing the financial statements on a regular basis. They push for the necessary adjustments to the strategic plan to assure a reasonable return on equity and assets.
Willingness To Be Criticized
The CEO comprehends that their performance should be measured by others, such as a formal or informal board of directors. This is viewed as necessary feedback that can trigger transformational action. They must possess enough self-confidence to subject themselves to an annual review process. They realize that performance must be quantifiable in critical areas that ultimately fall under their responsibility.