Situation: The CEO of a company has a problem. Quality control is an essential part of the company’s success, but ownership of quality control issues is proving difficult. When more than one department is involved, each blames the other for issues or deficiencies. Who owns quality control?
Advice from the CEOs:
At the end of the day the project owner must own this responsibility. This individual can delegate work but not accountability.
QC must be embedded within the company’s systems. In addition, someone has to walk in daily to ask what is wrong with this project? What can be done better? A skeptic.
Put a skeptic in the QC role – the job is to find what’s wrong, not what’s right – a tactical skeptic.
Skeptics are ideal for design reviews.
It isn’t necessary to hire someone for this role if there’s already a productive skeptic on staff.
This person needs to be vocal and will irritate some of the other staff. Coach staff to tolerate this, because the individual is performing an essential role.
It’s impossible to check everything. However, as issues are identified, everything can be documented.
As systems are reviewed, look for patterns of problems.
Develop solutions as problems are identified.
Log issues and solutions on a shared server to facilitate access by project managers.
Institute cross-functional design reviews – representatives from different functions offer different perspectives. Formalize design reviews in the early and start-up stages of projects.
Work on company culture – build anticipation of challenges into the culture.
Build a heuristic of the output of each program. Use this to make sure that inputs, filters and system checks will produce the desired output and the desired level of quality.
Ask: where is QC currently working within the company? Why is it working?
Operations and testers catch the errors.
The issue is distributing the knowledge gained. In complex systems nobody understands the full picture or the impact on the customer.
This becomes the responsibility of the project owner.
Situation: The CEO of a company is finding it increasingly difficult to maintain the passion that she had when the business was young. Day to day work feels like having a monkey on her back with too much time spent on sales and business minutiae. Too little time is spent on strategy and growth. How do you maintain the passion for your business?
Advice from the CEOs:
Look at what you like and don’t like – delegate what you don’t like.
Delegate activities which are inappropriate for a top executive – like answering the telephone when others are present to do this.
Get everybody in the same boat – get them rowing in unison.
Delegate more responsibility – with the understanding that others will make mistakes. When they do, they must understand their responsibility for repairing them.
Prioritize tasks as they are delegated to reduce conflict or confusion.
Strengthen relationships with key suppliers and customers. This is a strategic move to reduce future risk to the company.
How did you get the monkey off your back?
Ask managers and employees for their input – have them develop solutions. If they push back that they don’t know how or don’t have the resources, let them know that their job is to provide solutions, not just to identify problems.
This takes time and patience, but if the CEO is steadfast this can yield results in a surprisingly short period of time.
Reduce time spent on sales. Become the closer – the only person who can do that little something to close a sale.
Have the others do the heavy lifting our qualifying the customer, developing the solution, crafting the proposal and presenting this to the customer. Limit the CEO’s involvement to reviewing the proposal prior to presentation, and to acting as closer ONLY if sales can’t do the job themselves.
Learn to take time off – develop other interests. This is the first step in being able to take longer periods of time off.
A CEO struggles to balance time and responsibility commitments to his business
with demands of his family. This is not an uncommon struggle for executives.
The question is: what strategies are effective to address the needs of both.
How do you balance the demands of work and family?
from the CEOs:
Member: It takes a plan to find a solution.
what you want and write a business plan to get there.
relationship do you want with your soul mate? Make this part of the plan.
a conversation and test whether your and your spouse’s long-term visions are
take on additional work – this is good both for family relationships and the
role as CEO.
Member: My spouse and I talk about this a lot – particularly around time.
have agreed on how the week is carved out – family time/work time.
agree to honor each other as we are – not how we want the other to be.
work commitments because – long-term – your spouse and children more important
and more lasting than work.
Member: I’ve lived through the same issues.
probably erred on side of family vs. career. The benefit is that now, I can’t
get enough time to play with my kids. It’s great!
to children is very important during the early years. While infants are not as
capable of communicating as they will be later, the basic emotional and
learning patterns – as well as affection patterns – are created early in life.
It’s like the foundation of a building – not much to look at from the street,
but it allows the whole building to stand.
same mind that developed your business can solve this.
open to solutions.
is uncomfortable, but not bad. The struggle proves that you care.
your spouse as somebody who cares enough about herself so that she thinks she deserves
a class act from her mate. Isn’t this what you want in a mate?
Situation: A small tech company’s Board of Directors is made up primarily of founders and advisors. The CEO wants to know how other companies structure their Boards. Concerns include increasing accountability of management, obtaining an objective view of company operations so to counteract group-think, and accessing opportunities for strategic alignment. How do you structure a small company Board?
Advice from the CEOs:
In a small company, the fewer the number of board members and owners, the better. There are two considerations: control of the destiny of the company and complexity of the transaction in case of an investment or buy-out opportunity.
It is important to differentiate major from minor shareholders, including incentive-based owners.
What are the advantages of a Board of Directors?
Sounding Board – a group that can help management evaluate product and market opportunities.
Accountability – Board meetings provide an opportunity to assure that leadership and management are focusing on the best opportunities for the company.
Exit – knowledge of the industry, ties and introductions to potential acquirers.
Given new Federal regulations, the proper role of a Board has changed. Key responsibilities of Boards include:
Oversight of Corporate Governance.
Fiduciary Responsibility – to the shareholders.
Work with local or regional experts on Board role and structure. Experts can provide introductions to potential Board members that fit the company’s needs.
Good Board members will want Directors and Officers Insurance coverage.
Consider developing an Advisory Board, to compliment a stronger Boards of Directors.
Look at the key talents that the company is missing internally.
Ask friends, business partners and associates who they know who can add these talents.
Before kicking off a formal Advisory Board, start with informal discussions. Consider a facilitated dinner to share ideas.
One company has eight outside advisors who each receive 1/8 of a percent of the shares of the company for three years of service. The share offer required for service may be a function of the eventual forecasted exit value of the company.
Special thanks to the late Bill Rusher for his insight and contribution to this discussion.
Situation: The CEO of a professional service company is reaching retirement age. The plan for years has been for a key field manager to take on this role; however, neither the CEO, the founder nor most employees feel that this individual is up to the job. What can be done to either better prepare the key manager for the new role, or to demonstrate that this is unfeasible? How do you transition to new leadership?
Advice from the CEOs:
For the long-term benefit of the company, it is important to create a situation that will either prepare the field manager to succeed or provide the Company with a back-up plan for ongoing leadership.
If the CEO and founder are concerned about this individual’s ability to succeed, then coordinate a plan with the founder and then meet with the key manager.
Let the key manager know that the owners plan to sell the company in 3 years.
This can be an internal sale – the CEO and founder sell their shares to the key manager – or the owners will look for an outside buyer to buy out all current owners.
See how the key manager responds.
If the key manager expresses an interest in buying the CEO’s and founder’s shares, then require this individual to make the same level of financial commitment that the CEO and founder have made.
Another CEO experienced a comparable situation with an individual who was both underperforming and a significant shareholder.
This CEO created a very public vision of what he expected this individual to achieve – in positive terms. The CEO also put an outside hire in a similar role to create a performance comparison. The result was a significant increase in performance by the inside individual and a successful transition to additional responsibility.
If the key manager is to be put on a track that leads to the CEO role there will be two challenges: assuring that this individual can acquire the skills to succeed and assuring that the individual can demonstrate successful leadership within the Company. To meet these challenges, take the following steps:
Make a public announcement of the plan to transfer the mantle of leadership to the key manager;
Raise the bar of expectations for the key manager to demonstrate his or her leadership capacity;
Define a full program of training to provide the key manager with the skills to lead the Company;
Ideally, allow the key manager to prove his or her mettle through a highly visible responsibility – like growing a key market segment – so that he or she gains the respect of the others.
Require the same level of financial commitment that the CEO and founder currently bear, so that everyone knows that the key manager has “skin in the game.”
Put the key manager on the same compensation program as the CEO and founder, as this will become his or her compensation program on becoming CEO.
Situation: A CEO feels like he is on a roller coaster ride with unpredictable revenue and processes month to month. His ideal outcome will be to be able to go on vacation for 4-6 weeks, and have the business running better when he returns than when he left. Have you managed to achieve this? How do you create consistency in a business?
Advice from the CEOs:
Make your managers live up to their titles.
Insist that they go to each other to solve problems first, instead of always asking you.
When they ask a question, answer how to solve it – but don’t give them the solution.
Require them to present solutions rather than problems.
Be willing to spend money on their solutions.
Answer all questions with questions.
Ask them for their recommendation.
Keep asking until they come up with the answer.
You should not be doing jobs or tasks that are really your employees’ responsibilities.
When you start to delegate, it hurts for a while but it will work itself out.
What has been the impact on other companies when they’ve made these changes?
Businesses have become more diversified.
CEOs are focused strategically vs. tactically.
Businesses are more successful and profitable.
CEOs enjoy coming to work again.
How do you work with younger workers, millennials?
Allow flexibility – where appropriate – on hours and how they do their jobs.
Responsibility will vary by pay level – with the understanding that higher pay equals more responsibility and most likely longer hours.
Situation: A CEO is renegotiating the company’s agreement with a sales person. The sales person wants a declining residual commission on sales from past customers, regardless of who is servicing the account. A consultant who knows the industry advises the CEO to focus on new sales. What are the implications of each choice? How do you manage residual commissions?
Advice from the CEOs:
There are two types of salespeople: Hunters and Farmers.
Hunters focus on new business and generally get paid first year, then in later years only on sales that come specifically through their efforts.
Farmers focus on ongoing relationships with existing customers and are the service people for those customers. If they are paid commissions, they get paid on the ongoing sales that result directly from their efforts.
It is rare to find a salesperson who can manage both of these roles well, so companies often divide responsibilities, and any commissions paid, according to responsibility.
Decide what behavior you want from your sales person and pay for this – make the distinction between hunting and farming. Then ask the sales person which they want to be. If they say “both,” challenge this and let them know that they need to make a choice.
Situation: A CEO wants to push project ownership down to lower levels of the company. This is not happening unless the CEO pushes. How do you delegate yet stay informed as you push authority down the organization chart?
Advice from the CEOs:
The company needs systems and guidelines to clarify on what and when the CEO wants to either have input or hear back, and what can happen without the CEO’s knowledge.
Set levels of approval – dollar impact or decision type – and clarify what decisions can made at what level, what decisions need higher level approval and at what level, where they must inform you, and where you must sign off.
Similarly, establish regular reporting and meeting schedules, along with guidelines as to what is to be reported – again by budgetary impact or decision type – and assure that this reporting takes place.
“The Great Game of Business” by Jack Stack describes a company which has implemented these systems with astounding results. It provides a template and describes in detail how the system is implemented and what bumps they encountered along the way.
Invest more time in setting roles and responsibilities for your direct reports.
Keep reporting systems aligned across the company.
Expect over time to adjust levels of authority as individuals grow in responsibility and accountability.
Most importantly, lead by example. If a team member comes to the CEO for guidance on a project, refer them back to the proper manager for advice.
2015 Top ranked software systems to manage projects and processes from selected searches:
Capterra: Microsoft Project, Basecamp, Atlassian, Wrike, Podio
Situation: Two key managers of a company are too busy with day-to-day activities to focus their planned 40% of time on growth. The company has hired personnel to relieve some pressure on them, and a new ASP (Application Service Provider) is improving customer out-reach. How can the CEO take pressure off these managers so that they have time to grow the business? How do you focus managers on growth?
Advice from the CEOs:
Small companies grow through their early stages with everyone wearing many hats and doing everything. The company is now larger than this and it has to stop. Managers need to focus their responsibilities where you need them to focus and stop doing less important tasks.
Have you gone over key responsibilities and expectations for the two managers? Do they have clear objectives and deliverables? If not, focus on this.
Brainstorm with them how they could free-up time to focus on growth.
Do this in a meeting. Your plan is 10% growth. Ask for their ideas on how to grow the business, and develop a plan to put their ideas into action. What help or resources do they need to meet this plan?
Three heads better than one to ask core questions – let them come up with the answers.
Design processes to address needs and responsibilities.
Rank implementation of options in terms of impact to the company and financial results.
Given the ranking, implement programs sequentially – most relevant and easiest first.
Taking orders by phone is clerical. This should not be a manager’s prime focus.
Have a clerical person answer the phone, and train them over time.
Limit the manager’s direct involvement in phone orders to critical situations.
Situation: A company wants to recruit outside members to its Board of Directors. Currently, all Board members are founders except for a single early investor. How do you recruit outside Board members?
Advice from the CEOs:
Board Member selection is a strategic matter. You want to have people on your Board who have done what you want to do strategically with the company.
A Board does not run the company. Board Members provide input and perspective to help the CEO make better choices while running the company.
Board Members have fiduciary responsibility – to the Shareholders, the government (to assure that the company is being run legally), to customers, to employees, and to vendors. Their role is to assure that the company does what it says it plans to do.
How affordable are Board Members?
Stock options are very feasible if you have little cash to pay salaries. Much will have to do with the prospective member’s buying into your vision.
You will need to secure Directors and Officers Insurance for Board Members – $3K+ per year per member.
The rationale behind payment in stock is for Board Members to have the same incentives for company success as shareholders.
Target remuneration of Board Members is, for a pre-IPO company $100K per year if the company is successful, but if not then $100K over 5 years. Members of the Audit Committee are generally paid about double what other Board Members receive.
Is there a downside of having numerous minor shareholders?
Not really, except perhaps nuisance. You run the company. As long as you retain majority share ownership, Board members can only advise.
Sitting on another Board is one of the best ways to improve your own abilities as CEO. Advising another CEO on how to run their company is a learning experience.
Special thanks for input on this topic to Bill Rusher, founder of Rusher, Loscavio and LoPresto.