A CEO Only Does Three Things

1. CEOs Must Focus on Culture, People, and Numbers

A CEO only does three things. He sets the overall vision and strategy of the company and communicates it to all stakeholders. He recruits, hires, and retains the very best talent for the company. He makes sure there is always enough cash in the bank.

The CEO's trinity. Successful CEOs understand that their role is to focus on three critical areas: Culture, People, and Numbers. Culture sets the foundation for how the company operates and what it values. People are the driving force behind the company's success, and Numbers provide the metrics to measure and guide that success. By concentrating on these three areas, CEOs can effectively lead their organizations and drive growth.

Delegation is key. CEOs must resist the urge to involve themselves in every aspect of the business. Instead, they should delegate tasks that don't directly relate to Culture, People, or Numbers. This allows CEOs to maintain their focus on high-impact activities that truly move the needle for the company.

Balancing act. Effective CEOs understand that these three areas are interconnected. A strong Culture attracts and retains top talent (People), who in turn drive positive results (Numbers). By maintaining this balance, CEOs can create a virtuous cycle of success within their organizations.

2. Culture is Your Most Important Competitive Advantage

Culture is the ethical environment in which we live and work, including the beliefs, behavioral rules, traditions, and rituals that bind us together.

Culture as a differentiator. In today's competitive business landscape, a strong company culture can be the key factor that sets an organization apart from its rivals. Culture influences how employees behave, make decisions, and interact with customers, ultimately impacting the company's performance and success.

Intentional culture-building. CEOs must actively shape and nurture their company's culture, rather than allowing it to develop haphazardly. This involves:

• Defining core values and beliefs
• Establishing behavioral norms and expectations
• Creating and maintaining traditions and rituals
• Consistently communicating and reinforcing cultural elements

Culture's impact on performance. A well-defined and consistently reinforced culture can lead to:

• Increased employee engagement and productivity
• Improved customer satisfaction and loyalty
• Enhanced ability to attract and retain top talent
• Greater alignment between individual and organizational goals

3. Articulate and Live Your Company's Core Values

If you don't curate your Culture, someone else will, and the results will be the very thing you do not want—a least-common-denominator Culture.

Define your values. CEOs must clearly articulate their company's core values, which serve as the foundation for the organization's culture. This process involves:

1. Conducting a values assessment
2. Crafting value statements that provide context and meaning
3. Choosing a theme that unifies the values

Lead by example. It's not enough to simply state your values; CEOs must embody and live them every day. This demonstrates commitment and authenticity, inspiring employees to follow suit.

Create rituals and traditions. Develop regular practices that reinforce your company's values and culture. These can include:

• Daily or weekly team meetings
• Recognition programs that highlight value-aligned behaviors
• Company-wide events that celebrate cultural milestones

By consistently reinforcing values through actions and rituals, CEOs can create a strong, cohesive culture that guides employee behavior and decision-making.

4. Recruit Talent, Not Just Employees

Hiring people is an art, not a science, and résumés can't tell you whether someone will fit into a company's culture.

Talent acquisition mindset. CEOs should approach hiring with a focus on acquiring talent rather than simply filling positions. This involves looking beyond skills and experience to find individuals who align with the company's culture and have the potential to make significant contributions.

The 4Cs framework. Implement a comprehensive hiring process that evaluates candidates based on:

1. Culture fit
2. Capabilities
3. Compensation expectations
4. Commitment to the role and company

Involve the CEO. While it may not be feasible for CEOs to be involved in every hire, they should play a significant role in key positions and set the tone for the company's hiring practices. This ensures that new hires align with the organization's vision and values.

5. Retain Top Talent Through Praise and Development

Positivity is the primary product a leader manufactures.

Cultivate a praise culture. CEOs should lead by example in recognizing and appreciating employees' efforts and achievements. This can take various forms:

• Individual praise (one-on-one conversations, personal notes)
• Collective recognition (team meetings, company-wide announcements)
• Family acknowledgment (reaching out to employees' family members)

Invest in development. Show commitment to your employees' growth by:

• Providing ongoing training and learning opportunities
• Offering mentorship programs
• Creating clear career progression paths

Address issues with love. When performance problems arise, approach them with empathy and a focus on growth. This may involve:

• Reassessing role fit based on skills and time horizons
• Providing constructive feedback and support
• Assisting with transitions if necessary

By fostering a positive, growth-oriented environment, CEOs can significantly improve talent retention and overall company performance.

6. Lead with Key Performance Indicators (KPIs)

The person who decides what gets measured is the real person in control of the business.

Identify crucial metrics. CEOs must determine the key performance indicators that truly drive their business success. These should include both:

• Leading indicators (predictive metrics)
• Lagging indicators (historical performance measures)

Set the agenda. By choosing which KPIs to focus on, CEOs effectively set the priorities for the entire organization. This helps align efforts and resources towards the most impactful areas of the business.

Share data transparently. Foster a culture of openness by sharing relevant KPIs throughout the organization. This can involve:

• Creating dashboards accessible to all employees
• Regularly discussing performance metrics in team meetings
• Educating employees on the meaning and importance of key metrics

By leading with data and fostering transparency, CEOs can empower their teams to make informed decisions and take ownership of their contributions to the company's success.

7. Foster Ownership Thinking Among Employees

When we believe our work matters, we are capable of accomplishing extraordinary things.

Cultivate a sense of purpose. Help employees understand how their work contributes to the company's overall mission and success. This involves:

• Clearly communicating company goals and strategies
• Showing the direct impact of individual and team efforts on key metrics
• Celebrating wins and learning from setbacks together

Empower decision-making. Give employees the authority and information they need to make decisions within their areas of responsibility. This may include:

• Providing access to relevant data and KPIs
• Encouraging problem-solving at all levels of the organization
• Supporting calculated risk-taking and learning from failures

Implement profit-sharing or equity programs. Consider offering employees a stake in the company's success through:

• Performance-based bonuses tied to company results
• Employee stock ownership plans (ESOPs)
• Profit-sharing programs

By fostering ownership thinking, CEOs can create a more engaged, motivated, and high-performing workforce that drives the company's success as if it were their own.

Last updated: October 3, 2024