One of the members of my Vistage CEO group has just been through the abortive sale of the company and, as a consequence, he has looked at the governance of the business going forward.
His decision initially was to promote his deputy to the role of Managing Director and take on the new role of Chief Executive Officer himself.
This caused me to think about the definition of roles, certainly at a senior level in a business, and how these definitions can and should be communicated to everyone to ensure the minimum of overlap.
The role of the CEO starts, I would suggest, with the statement that the CEO does not run the company although he/she has the responsibility for ensuring that the business runs effectively.
Moreover, that responsibility covers not only the successful performance of the business but also the vision, the strategic direction of the business, the need for the maintenance of the values espoused, the personnel and HR policies, and the overall financial health of the company.
These are not day-to-day operational matters but are crucial in the effective running of any business.
Perhaps it makes sense to point out that the role of the CEO is much closer to that of the Chairman rather than merely a promoted Managing Director, with all that that implies.
There are certain areas of activity which are part of the CEO role which include a constant monitoring of capital expenditure, the recruitment policy, the health and safety policy, maintaining the virtuoso aspects of all new recruits and constantly looking for talent both outside and even more importantly, inside the business.
On the other hand, the role of the Managing Director under these circumstances is a far more hands on role with full responsibility for the successful operation of all the facets of the business and without the temptation to micro-manage.
In short the difference is that of a “hands on” role as distinct from a “hands-IN” or even worse, “fingers-in” role.
For some people, the change from a hand-on role to a very much hands off role can be difficult to cope with and I have heard it said on occasion that:
· “I feel almost embarrassed at apparently having nothing to do when the people are working hard for the business and I seem to be doing nothing”
Please note: the word at issue is DOING.
One of the our US speakers, Ole Carlson, during the time that he was a Group Chairman in Vistage, used to put up a banner at meetings which said, in effect:
- · “We only do CEO stuff around here”
and that neatly encompasses the difference between a strategic and an essentially tactical role in the business.
In the Vistage peer group system there is often a tendency for members to bring to the table issues which are essentially operational and which, frankly, should be considered on an operational basis. The people running the business know far more about how to run it than a group of people without having any domain knowledge.
On the other hand, the leadership role theoretically can be transposed from one company to another simply because the role has broad similarities, company to company.
That is a massive generalisation, of course, and some domain knowledge is very valuable in the management of the business but it does say that many functions of leadership are transferable.
Overcoming the pain of not being involved day0to-day takes considerable persistence and dedication, and mainly, a determination by the CEO that his/her hands don’t need to be dirty. There are other and better ways of demonstrating the value on the CEO role to the business and that starts with “hands off”.
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