There is only one thing worse than an actively bad CEO, and that is an absent CEO.
This may seem like an extreme statement, but it’s supported not only by my experience seeing companies fall apart under barely-there CEOs. It’s also backed up by research, which shows that employees experience more alienation under hands-off, laissez-faire leaders than under tyrannical leaders. No matter its industry, size, or geographic location, every organization needs to see and hear from its CEO.
So, why do CEOs sometimes shrink into the background?
My theory is that the absent CEO often results from a feeling of paralysis. When everything rests on your shoulders and you’re operating with no special CEO handbook, the best course of action may seem like no action at all. After all, the people in the company are smart. They will figure it out on their own, right?
For better or worse, even the most well-oiled organizations need a CEO who is active, visible, and answers the most pressing questions employees have. This doesn’t mean the CEO needs to be constantly stressed. In fact, I’ve praised the virtues of the lazy CEO for years. The trick is to focus on the few essential responsibilities unique to the CEO role. When you’re covering these, you are by definition doing well as a CEO.
A simple way to start fulfilling these five responsibilities is to pose each one as a question you need to answer for the organization. Does your workforce know the answers to the following five questions? If not, they are likely operating with multiple agendas, no shared priorities, and conflicting subcultures. But if they can, you can rest assured that you are setting them up for sustained success.
1. Where are we going?
This is the first question to answer before embarking on any journey, and it’s also the first question the CEO must answer.
The result is your strategy, mission, and vision of the company—where it’s going and why. The CEO must be able to communicate this information at the appropriate level for employees, customers, and shareholders, and ensure that everyone within the organization is clear on how the direction impacts his or her job and daily responsibilities. Other people may help create the strategic vision, but the CEO must tell the story of “where we are going” in a way that is clear, engaging, and exciting. And everything the CEO does must support the vision.
If you work at Mastercard, you know where your organization is headed, thanks largely to CEO Ajay Banga. In his statements to employees and to the press—and even in the company’s security filing—Banga is clear that Mastercard is not just another credit card company; it’s a technology company. Banga has led the firm in aggressively pursuing tech acquisitions and embracing digital transformation, and its stock rose over 40 percent in 2019. With the North Star of becoming a full-fledged technology company before them, employees at all levels know where they are headed.
2. Do we have what we need?
The CEO is the organization’s chief resource-provider. These resources come in two primary types: capital and people.
The CEO must make both available in the proper quantities and at the right time for the company to be successful. While balancing capital is hard, building the best team is even harder. Success as CEO will depend more on your ability to acquire and maximize human talent than any other skill. Balancing resources of either type is hard work and will often leave you comparing apples and oranges, but it is a key role that only the CEO can perform. And if your people and teams feel they don’t have what they need to achieve success, the result will be frustration and failure.
Microsoft CEO Satya Nadella is especially good at providing his organization with the talented people it needs. Rather than letting the résumé dictate a candidate’s value, Nadella has codified his two biggest criteria for new hires, which he calls “Nadella’s Necessities.” They are: (1) Does the person create clarity? And (2) does the person create energy? This distinctive lens for hiring great people shows the effort Nadella puts into ensuring that his organization has plenty of its most precious resource: people who can make great things happen.
3. How do we relate?
To perform as a cohesive team, employees need to understand the unspoken rules that govern how people relate to each other within the organization. The word we commonly use for this is culture.
Culture is how things get done in the company, and it influences the entirety of the employee experience—and therefore the customer experience. The CEO must constantly observe and manage for the culture he wants. Just like the parents in a family, the CEO sets the tone, and what he rewards and allows will drive the culture. In my opinion, the most critical word in the definition of culture is values. It is the CEO’s job to ensure that a company’s values are applied consistently from top to bottom, across all departments, across all relationships between employees. No person or group can be exempt.
At Lockheed Martin, CEO Marillyn Hewson has delivered excellent shareholder return—and she’s also the architect of a distinctive culture that shapes relationships within the organization. At the cornerstone of that culture are the entwined concepts of innovation, diversity, and inclusion. “Our company and our society are at their best when we bring together talented people with a wide range of backgrounds and capabilities,” says Hewson. To that end, the organization operates many programs to foster a welcoming workplace that respects all people equally. It has, for example, established employee resource groups (ERGs) to represent employees of various backgrounds, from race and ethnicity to military/veteran status, and works with national minority-serving institutions as it sources talent companywide.
4. How do we decide?
Decisions are the fuel on which every organization runs.
The new CEO is often surprised by the breadth of the issues he is forced to deal with—one minute discussing a new product, the next a building lease, and the next a legal issue. The decision-making buck stops at the CEO’s desk, whether he’s a expert in the issue or not. That is the job. If you don’t like making decisions when you aren’t sure of the correct answer, don’t take a CEO job, because this might just be the biggest part of it. This does not mean, however, that the CEO should make all the decisions. It’s critical that people understand how to triage decisions, knowing which are theirs to make and which they should escalate up the management chain. Success in this responsibility means that decisions are made at the right level, by the right people, in a timely fashion.
You’ve probably seen Netflix’s famous 2009 “culture deck.” Created by CEO Reed Hastings, the deck not only helps answer the “how we relate” question—it also shows employees exactly how they are expected to make decisions. The decision-making model Hastings champions is based on employees’ wide latitude to use their own judgment. The company’s top value is “encouraging independent decision-making by employees.” Every employee knows he or she is free to make autonomous decisions despite ambiguity, and that these decisions should be “based on the long-term, not near term.” That leaves Hastings to make the few CEO-level decisions that matter most, while the rest of his carefully selected team is empowered to make fast, informed decisions of their own.
5. Did we get there?
The final question the CEO must answer for her team is whether the company got where it wanted to go.
This means taking ultimate responsibility for the performance of the company and candidly sharing the outcome of company-level goals and objectives. Employees need to understand how they are collectively performing—otherwise, it’s like playing four quarters of a football game without ever being allowed to see the score. For most people, that would be worse than losing.
At Kerbey Lane, the legendary restaurant chain here in Austin, Texas, even the bussers understand where the company stands on its goals. That’s because CEO Mason Ayer uses “open-book management,” meaning that the company’s books, including everything but salary data, are open to every employee. Employees are also educated on how they impact the bottom line, so they can tangibly contribute to Ayer’s stated goals. It doesn’t hurt that Ayer also uses Khorus to record and update Kerbey Lane’s goals from week, sharing with his team how priorities are progressing.
How well are you answering these five questions for your own team? Are you carving out time every week to communicate broadly on these topics? The flood of demands on your time can easily distract you from doing so. Nevertheless, the best CEOs remember that these five questions are the true heart of the role, and they prioritize answering them accordingly.