Are there any traits to indicate a highly effective CEO for your Phoenix- based company?
Unfortunately, there are no objective quantifiable markers of a good CEO. Great CEO’s backgrounds in a single industry or wide-ranging careers across many functions and sectors. One of the biggest mistakes is to hire a CEO who has risen to the number one position and has unfortunately risen well beyond their capabilities. When we analyze successful CEOs there are a few key traits that seem to come up over and over again:
Nothing is more important to Business Growth and success for a company than a CEO who understands where the business is today and where will it be tomorrow. Strong, sustainable companies can understand what the customer is going to need in the future, we have seen that in rare circumstances even before the customer knows he needs it.
A well-rounded CEO will develop a management structure that oversees relationships between functions and positions, and delegates roles, responsibilities, and authority to carry out defined tasks. Organizations are open systems in that they affect and must be adaptive to the changing environment. Multiple layers can slow a business down, demotivate, and kill innovation. Successful CEOs will have to find quality vice presidents, those vice presidents have to find quality managers and those managers have to find good workers, all of these are the organizational skills required of a CEO.
Once a decision is made a CEO will execute the through clear task definition, delegation, and distraction-free priority execution. CEOs can be undemocratic but this has to be balanced with the “self-evident” limitation of CEOs we have witnessed in so many progressive companies.
Arguably the most important attribute of a CEO, beyond his or her integrity, is a sensitivity regarding everyone else’s integrity. CEOs need to know when they’re dealing with people who cannot or will not deliver what is expected of them. Along the same lines, while a CEO needs to be demanding and expect high standards to be achieved, they cannot be hostile or nonapproachable which results in employees not delivering the truth or having a “real picture” discussion.
Ability to build Value
Short-term profit maximization does not necessarily increase shareholder value. If a business sells sub-standard products to reduce costs and make a quick profit, it damages its reputation and therefore destroys competitive advantage in the future. The same holds for businesses that neglect research or investment in motivated and well-trained employees. Shareholders, analysts, and the media will usually find out about these issues and therefore reduce the price they are prepared to pay for shares of this business. Value is created by many of the elements already mentioned, such as people, integrity, uniqueness, and vision, and a CEO’s failure to culture these will reduce success and decrease stakeholder value.
Managing for the future
CEOs generate above-average returns on capital, something that comes about largely from strong margins based on a controlled/efficient operating structure and strong revenue growth, and efficient use of capital. Often this means running a lean, efficient structure that is no bigger than it has to be and having a CEO who is willing to discard business that doesn’t make financial sense (despite the sensitivities to keep it).
It is not easy to evaluate Arizona CEOs and looking backward at statistics does not show the business nuances that generated those results. A few things are more important in the long-term success of a company than a top CEO, it is very much worth an owner’s time to do due diligence on a CEO and the vision they can bring.
Thanks for reading. I hope you found the article interesting. I’d welcome your feedback on this article or let me know if there is a new topic that you would like to discuss.
To Greater Success,
Founder & CEO