Category Archives: Team

What’s My Role as CEO? Five Perspectives

Situation: The CEO questions whether he is the right person to lead the Company. The Company has solid revenues and profitability, but growth is lower than expected. How can the CEO improve his situation and solidify his leadership?

Advice from the CEOs:

  • The primary functions of the CEO are to assure the maintenance of company values, to provide vision, and to monitor resource allocation within the company.
  • Identify your strengths, and the most important areas where you need help. Create an organizational chart not of positions but of strengths that are needed within the company. Compare these positions with your own strengths, and focus your own activities on your strengths. Promote or hire talent to support you in the latter areas.
    • As you hire or promote and delegate, make sure that you are allowing those with new responsibility the latitude to run their areas of responsibility.
  • Should I consider hiring a CEO or COO?
    • Maybe. If you do, first identify the key leadership traits that we most want to see in a candidate.
    • If you hire a CEO, this individual should have skin in the game. They must be perceived as a leader, and there must be a clean hand-off.
    • Consider hiring a COO. This can be someone willing to take this role with the understanding that your long-term objective is to replace yourself as CEO. A person unwilling to come on as COO and to develop into the CEO may not be the right candidate.

Key Words: Leadership, Role, Strengths, Delegation, Organizational Chart, Values, Vision, Resource Allocation, CEO, COO                                                             [like]

Merging or Selling the Company – How do we Retain Key Staff? Five Suggestions

Situation: The Company has a merger / sale of the company pending. While most direct staff will be retained, roughly half of the indirect staff may be at risk. The CEO’s objective is twofold: to retain key indirect talent before and during transition, and to do right by those who have made strong contributions to the company.

Advice from the CEOs:

  • One member dealt with this a few years ago. They set up a retention fund for important but potentially impacted employees in advance of the anticipated transaction. The longer the employee stayed with the company through the transition, the larger the payout for which they were eligible. In the case of no transaction, the funds were to be returned to the company.
    • An alternate version of this option is to use insurance to fund a retention package for a group of key employees. This package may or may not be required depending upon the transition.
  • For potentially impacted employees, consider a retention package that rewards them for staying long enough to train the purchaser in their areas of expertise.
  • Look at outplacement services as part of the package for employees. Let employees know that this is part of the package if they are not retained post transaction.
  • Seek outside consultant expertise to assist in the design and administration of a retention package. Also look at your own network, and seek the advice of others who are well-versed with the technical aspects of employee transition.

Key Words: Merger, Sale, Employee Retention, Insurance, Outplacement  [like]

Where Can I Find a Good Salesperson? Five Suggestions

Situation: The Company wants to expand its sales force by adding “diamonds in the rough” – hungry individuals motivated by a high commission/low salary opportunity with high total compensation potential. How can they find these individuals?

Advice from the CEOs:

  • Hire “out of school” and use a good sales assessment tool to evaluate which candidates have the right attitude and skill set to succeed. Create a career path through a lower paid inside sales position to eventual higher paid outside sales position while the individual gets up to speed understanding your technology and as they develop sales skills. This helps to generate revenue to cover costs while developing new sales candidates.
  • Accept that you will likely experience turnover hiring candidates out of school. High commission sales forces in other industries deal with 85% turnover over 3 years to find “keepers.” This may be a significantly higher level of turn-over than you are used to in other positions.
  • Look to sales job fairs and Craig’s List for candidates.
  • Give your current sales people a bonus for referring friends or acquaintances who will stay with you for 6 or 12 months. Pay out theses bonuses over times.
  • Find a good sales recruiter to find experienced high-producers in industries with a similar product sale.
    • The appeal to these individuals is a high earnings opportunity combined with the chance to sell a sexy product.
    • Because these people will already be high earners, you may have to create a draw system so that they do not have to make too great an earnings sacrifice by switching to your Company.

Key Words: Sales, Hiring, Training, Commissions, Referrals, Bonuses  [like]

Planning Compassionately for Tragedy at Work – Seven Suggestions

Situation: A long-standing employee committed suicide away from work. Relatives of this person work in the company. How can the CEO assure that assistance is available to help employees resolve their emotional shock?

Advice from the CEOs:

  • First, do not assume that this is a passing situation and that all will recover without assistance. One never knows what may have passed between employees in the days or hours prior to the event or what lingering feelings of guilt or involvement may remain and impact future performance or development.
  • Initiate personal contact with those employees closest to the individual to console them.
  • Search for local resources on death and dying that provide trained counselors to work with employees. The service is generally free of charge, but a donation is appropriate.
  • Be proactive – create a remembrance fund to allow employees to contribute as they wish. This can assist them in their personal bereavement process.
  • Establish a company bereavement policy – for example 3 days time off with pay with guidelines as to situations that trigger this benefit – so that they can deal with their loss.
  • One company has an Employee Assistance Program. They pay about $5000/year to access services for employees. This has been a very good program for the company.
  • There will inevitably be future situations that arise through accident, illness or other causes that will directly impact employees. It is best to be prepared with a plan in case any of these occur.

Key Words: Performance, Bereavement, Policy, Planning  [like]

On-boarding a New CFO – Four Imperatives or Considerations

Situation: The Company is hiring their first CFO. How do they integrate this key person into the company?

Advice from the CEOs:

  • The company should reflect the values, needs and desires of the CEO.
    • Have a clear discussion and agreement with the CFO candidate on values, role, and organizational structure before hiring or announcing anything to the company.
    • The talents of the CEO and CFO should complement each other.
  • The CEO may put the CFO in charge of areas that they want to delegate – accounting, administration, finance and contracts.
    • The CEO should remain involved in banking relationships.
  • Recommended announcements and timeline:
    • When the new CFO is announced, simultaneously present the new organization chart (broad responsibilities, not detailed position descriptions).
    • Set a timeline for realignment of roles. It is not necessary to specify exact roles at the time of the announcement – let everyone know that this is a work in progress and give a time frame within which all will be resolved.
  • Once the CFO is in place, the CEO and CFO should meet at least weekly, to assure that the CFO has the support and resources needed to accomplish their responsibilities.
    • All decisions within the CFO’s group, personnel responsibilities and any shifts in roles should come from the CFO, with the support of the CEO.
    • This will help the new CFO to more rapidly assimilate into the company and will give them the authority needed to manage their organization.

Key Words: CFO, On-Boarding, Values, Roles, Responsibilities, Authority, Personnel, Delegation  [like]

Developing Leaders within the Ranks: Four Approaches

Situation: As they have grown, the Company has used Bay Area talent to seed new locations around the country. Leadership is now short at headquarters. What have others done to fill leadership gaps?

Advice from the CEOs:

  • Develop a formal Leadership Development Program.
    • Identify the top leadership candidates with the company – the top 10%.
    • Identify their individual goals and determine whether these are consistent with company values.
    • Clearly communicate the roles and expectations that you have for future company leaders – both the upsides and the sacrifices that you anticipate that they will have to make.
    • Team the leadership candidates 1/1 with mentors to guide them.
    • Consider an “internal” Board of Directors for developing leaders. Members are considered advisors to the true Board of Directors, understand company strategy, are coached on company values, and are involved in an advisory capacity in key company decisions.
    • Consider a leadership “boot camp” program to groom potential leaders and weed out those who like the idea of leadership more than the reality.
    • From the standpoint of a very hierarchical company, the following items are involved:
      • Time
      • Talent
      • Defining the traits for key positions
      • Identifying candidates who appear to possess these traits
      • Assigning leadership roles to these individuals in executing the annual strategic plan – with senior managers mentoring leaders-in-training
      • Include training and development in professional development plans
      • Investigate employee assessment tools, for example the Myers-Briggs tools.

Key Words: Leadership, Development, Goals, Values, Roles, Expectations, Mentor  [like]

How do you Create Performance Incentives? Four Approaches

Situation: The Company is considering options for both team and individual recognition. What have other companies found to be effective?

Advice from the CEOs:

  • One company has foremen compete on project quality, cost containment, and other measures. Bonuses are based on a mix of team performance, project difficulty and individual initiative.
  • One company uses year-end bonuses, but places more emphasis on frequent small recognitions: pedicure, manicure, going out for a meal on the company – things that let the employees know that they are appreciated on a regular basis. Any incentives paid are based on a mix of individual and team performance.
  • One company has completely eliminated bonuses. Salaries were raised to make up the difference, and individual incentives are created and paid during the year. Incentives reward specific accomplishments which are highlighted when the incentive is paid. Incentives are a mix of team and individual performance.
  • One company is very generous with bonuses – $5K to $10K at a time at the discretion of the CEO. These are paid face to face by the CEO and the individual is congratulated on their performance. However, the bonus recipient also signs a paper pledging not to talk about the bonus. If they tell others about their bonus, they are eliminated from the bonus pool. The company also uses publicly announced annual awards, performance-based monthly awards, shirts, etc. that are presented at company meetings. Interestingly, the smaller rewards and public recognition appear to have the most impact.

Key Words: Recognition, Bonus, Reward, Public Recognition, Effectiveness. Competition, Incentive  [like]

We Only Want A-Players – But Do They Want Us? – Five Strategies

Situation: An early stage company will staff-up over the next year. In the past the CEO has recruited individuals with big company experience and solid resumes, only to find that they had difficulty transitioning to the hands-on responsibility of a small company. How do you find candidates who are highly experienced but who can also excel in a small company environment?

Advice from the CEOs:

  • The best candidates are not in the job-search pool. They are currently working but open to a change. Some will wish to return to a more hands-on situation.
  • Let people know that you are looking for “the best” and have a great opportunity. Create some buzz.
    • Go to your network ask “who do you know?” Don’t be shy!
  • Look for achievers – with proven performance in companies of the size that you plan to be in 12-18 months. Check their references carefully.
  • What can we do now, while we seek the right people?
    • Use contractors and consultants. These people are more entrepreneurial, self-starting, and self-accountable. Monitor their work. If they are good, add them to your team as permanent employees.
    • Develop a milestone-based personnel plan as part of your business plan:
      • When we hit Milestone A, we will need an operations manager.
      • When we hit Milestone B, we will need channel or market development expertise.
    • Conduct case studies of how other companies in your or similar spaces have facilitated their scale-ups. What worked? What didn’t? Why?

Key Words: Candidates, Recruiting, Fit, Culture, Start-up, Achievers, Performance  [like]

My Worst Nightmare – Sell or Downsize? Fifteen Considerations (Part 2)

Situation: The Company is losing money and has been approached about a merger. The CEO’s ideal outcome would be to get cash on the table, integrate with the merger partner and continue business. The other alternative – downsizing – may hurt company morale. What are the best options available?

Advice from the CEOs:

  • The downsizing experience is wrenching, but results were far more positive than expected.
    • A 10% cut resulted in a 30% increase in productivity.
    • Employees once thought to be critical were not missed post-layoff.
    • The employees generally understood more about the situation than the CEO knew, and those remaining responded positively to a restructuring that allowed them to keep their jobs.
    • Some companies used a layoff as an opportunity to cross-train employees and increase company flexibility.
    • If concerned about loss of key talent, consider rehiring a laid-off employee on a consulting basis for a limited period.
  • Smoothing the layoff process:
    • Communicate with the employees. Let them know the truth, and share enough of the situation so that they understand.
    • Challenge employees to come up with ways to save money or make processes more efficient and cost-effective. This can have a remarkable impact.
    • Consider a cross the board salary reduction as a temporary alternative to layoffs.
    • Position as a layoff to restructure expenses – keeps you on the right side of employment law.
    • Obtain assistance from a personnel consultant who can help to handle the process effectively.
  • Summary: If you can save expenses, return to profitability and stay independent you will be happier than you may be post-merger.

Key Words: Merger, Negotiation, Ownership, Downsizing, Mitigation, Layoffs, Profitability  [like]

My Worst Nightmare – Sell or Downsize? Fifteen Considerations (Part 1)

Situation: The Company is losing money and has been approached about a merger. The CEO’s ideal outcome would be to get cash on the table, integrate with the merger partner and continue business. The other alternative – downsizing – may hurt company morale. What are the best options available?

Advice from the CEOs:

  • The realities of mergers:
    • 70% of mergers fail, and the merger process often leaves founders with a minority stake in the company.
    • Experience of others with partners has been disappointing – better to control your own destiny.
    • Look at all alternatives before you jump into a merger. You founded the company and have brought it this far. The company will be a different company following a merger, and not the company that you founded or have led to date.
  • Message to your potential merger partner:
    • Be a reluctant bride.
    • “We are making improvements to return to profitability and I’ve joined a board of CEOs who are consulting me through the process.”
    • If the partner sweetens the offer to keep the merger on the table, make sure that you get 51% of the merged company and retain control of your own fate.
  • Reconsider downsizing – Others have found the downsizing experience wrenching, but with far more positive results than they expected.
    • More on this in the next ceo2ceos blog.
  • Summary: look more closely at your situation before your jump into a merger. If you can save expenses, return to profitability and stay independent you will be happier.

Key Words: Merger, Negotiation, Ownership, Downsizing, Mitigation, Layoffs, Profitability  [like]