Company Leadership Requires At Least Three Abilities
A young owner of a thriving business asked an older and wiser business owner one day what it took to be a successful CEO. The seasoned businessman did not hesitate before saying there are at least three things they must do and do well: 1. Establish the vision, 2. Recruit, hire and retain the best staff, and 3. Be certain there is always enough cash in the bank.
With all the books and articles that have been written on leadership in business, the concept of only three abilities that a CEO must do to be successful, seems not only a bit simplistic, it borders on being utterly ridiculous. But, when you get a little more granular by looking at those abilities, there is some legitimacy and logic to the comment. Furthermore, the wiser man indicated, depending on the size of the company, many tasks should be delegated. As is most often the case, the larger the company, the more that can be delegated to others. The smaller the company, the more the CEO must do to achieve success. To add credibility to his comments, the older CEO and his venture capital firm were some of the earlier investors in companies like Twitter, Zynga, Foursquare and Kickstarter, just to name a few.
The vision of your company is usually derived from the mission statement. The vision should define what the business will look like in the future. The vision statement is intended to help provide a specific direction that should allow everyone in the company to get clarity and further hone their individual duties and responsibilities. Your role as a leader should be to encourage everyone in your organization to stay on task and stress the importance of everyone on the team to work together in order to maximize the customer experience. As a leader, your primary objective after sharing the vision is to be certain the employees ‘buy-in’ to the vision. Seek their input and ideas before you ask for their support. All these ingredients will be critical for the on-going success of your firm.
Recruit, hire and retain the best staff possible. The CEO is the primary representative of the business. They are the ‘front person’. If they are part of the hiring process (typically by participating in the final interview) it speaks well of the company and is usually a very strong indicator for the recruit. The CEO should also be involved in the hiring process, being certain that a fair and equitable package is being offered to the right individual at the proper level. In other words, keep the playing field level with regard to benefits and salaries.
Much has been said about employee retention. As businesses have morphed into an information based economy, people have become the receptacles of knowledge and experience. If they leave, that knowledge goes with them. With a caring and considerate CEO as a coach and mentor to the staff, employee retention is maintained and more, better, faster company growth can result. The sensitive CEO will know how far to push his staff and when not to push them. They should also be cognizant of when employees need encouragement and when they deserve correction.
Cash in the bank. This is a topic many CEOs don’t bring up, but you can be certain they know how important it is for their company. First of all, the CEO must know whether they are in an excess cash position or a deficit cash position. For most companies, a typical objective is to have anywhere from three to six months worth of your operating expenses on hand (i.e. Cash in the bank). If you are in the enviable position of having enough cash that represents six months or more of expenses, then you can look to invest in ways of growing your business. If you have less than that, you might want to concentrate on this objective more closely, until you have a good and firm grip on how cash flows into the business and how it leaves the business. If you are not comfortable in how to do these exercises, get help. The challenge of managing your cash is one of, if not THE most important tasks you will have in successfully running your company.
Of course, in any position of leadership, there are many qualities a leader should possess, but for your business to grow, it certainly will not hurt to focus on these three first.
Dan Arens is an Indiana-based business growth advisor.