CEOs at every age and every stage often make some very incorrect assumptions:
The first is that employees care as much as the CEO does about the company. The second is
that those same employees understand, have been trained and execute to high standards of
quality service for customers, business partners and each other. The third is that every
employee follows through and, as a result, everything gets done on time.
What is at the root cause of all this? I sum it up as saying that it begins and ends with the CEO.
The man or woman in the mirror is creating the damage. They own it.
The first self-inflicted wound is when the CEO fails to share information that would improve the
condition and operations of the business.
This can be proactively addressed for any under delivering, underperforming company by
creating what I call the “Scoreboard for the Whole Team.” Without this visual information,
updated regularly, all but a few are in the dark about how things really are.
I can’t imagine a player of any sport not being able to see what the scoreboard is, from any
place on the field or even from the stands during the game. When you turn on the television or
the radio to a game, all you care about is what the score is.
The scoreboard clearly states to all employees “Here’s where we are and here’s where we need
to be.” It takes maybe five seconds for even the most disengaged employee to see where the
gap is and to identify what needs to happen to close it.
Concerned about sharing confidential information? Then don’t! But share what you can so that
people can help. Worried that some will leave because they can’t hand the truth? Let them
depart.
As the CEO, you have to ask yourself if your team is playing to win. Because if they are, keep
let apprised of the score to help your team win.
A second self-inflicted wound is the CEOs preoccupation with reducing fixed overhead when the
real point of focus of a profit-improvement plan should be on improving the gross margin.
I worked for a CEO who went around sniffing the air in certain departments, announcing to all
within the sound of his loud voice, “Smell the overhead around here.” It was not only vulgar, it
was never the issue in his company.
The real problem was that he was financially illiterate.
Every dollar improvement in gross margin, whether through increased revenue, reduction of
cash discounts or decreasing the cost of goods sold, is found money and falls right to the
bottom line.
In a competitive marketplace, perhaps prices can’t be raised, and cash discounts can’t be
tinkered with. But every company can reduce cost of goods sold if they put time and attention to
it.
I know that finding less expensive ways to deliver a product or a service isn’t the most appealing
thing to do for some CEOs — it doesn’t give them a rush like landing a new big client.
The cost of goods sold doesn’t sound sexy. In fact, it isn’t sexy at all. But it’s a very important
number.
Reducing cost of goods sold is a lot easier to do and it won’t take anywhere near as long as the
sales cycle of landing a new client.
As an example, Bob Crandall, former CEO of American Airlines, was on a mission to reduce
costs. By eliminating the three black olives in the each salad served, it is alleged the company
saved around $700,000 a year without anyone saying a word.
The third self-inflicted wound is the failure to inspect. The old adage of “inspect what you
expect” is often forgotten in the crush of daily business.
Trapped in their own offices, isolated from clients, vendors, and most of all, employees, CEOs
are often surprised and then angry when they hear something went wrong in their own
company.
What’s the solution? MBWA. Management By Walking Around. Get out from behind the desk;
walk through the facilities; ask questions; listen to the answers. Go visit clients on a regular
basis. Meet with your vendors, your business partners. These things are important and they
take time.
The CEO is never going to run out of things to do. Time management will always be an issue.
But would you rather push the big boulder up the hill by yourself or would you prefer to have all
those who could help you actually do just that?
Ken Keller is an executive coach who works with small and midsize B2B
company owners, CEOs and entrepreneurs. He facilitates formal top executive
peer groups for business expansion, including revenue growth, improved internal
efficiencies and greater profitability.
Email:[email protected]. Keller’s column
reflects his own views and not necessarily those of the SCVBJ.
