Wednesday, October 07, 2015

The Right Mindset for CEO Success

The Right Mindset for CEO Success
By David Joseph Hoppock | June 29, 2015

The Chief Executive Officer of a company is a person that employees, investors and customers look to when organizational decisions are made, good or bad. More often than not, they are the figurehead that receives the praise or ridicule that comes with holding a leadership position such as this. Owning the role of CEO is no simple task so it is imperative that CEOs have the correct mindset to ensure the success of their organization.


Possessing the ability to execute a plan of action effectively and efficiently is a vital attribute for a CEO and should be of the highest priority. Proper execution can be the difference of maintaining an edge on the competition or losing revenue opportunities and market share. Ultimately, business decisions are what make headlines, move stock prices and determine the fate of a company.


The mental capacity to transcend ego and any individual aspirations is necessary in managing an effective business. Considering all areas of the organization and how they fit into the overall vision and mission will aid in understanding the short and long-term goals of the company. Forward thinking and planning for uncertainty will allow a business to be better prepared for challenges when they arise.


Being adaptable is a crucial part of business as innovation is a byproduct of competition. Businesses are progressive by nature, so having a stationary attitude will only harm a firm’s standing in the marketplace. For instance, International Business Machines Corp. (IBM), surprisingly, used to sell commercial scales, punch card tabulators, enormous mainframe computers and calculators. Now they produce software in addition to providing consulting and IT services.

General Electric Co. (GE) was established as a way for Thomas Edison to organize and produce his electric inventions. However, today it manufactures gas engines, hybrid locomotives, HD CT scanners, chemical sensors and ultra-sound devices. It’s interesting to imagine where these companies would be now if their leaders had not adapted to opportunities and trends in their respective industries.


Genuinely understanding the talents and strengths of those that work for a company can be a significant asset to its growth and progress. Embracing the contribution employees offer will invite time that could be better spent strategizing and focusing on organizational goals. The willingness to ask for assistance in less familiar matters is also the quality of a strong leader.


As the CEO of a company, things won’t always work in your favor and obstacles will be imminent. People are much more likely to admire positive leadership as opposed to pessimism. Having an optimistic yet realistic outlook will speak volumes about their character and in turn gain them more respect.


Most employees don’t like working for a tyrant. Being approachable and willing to lend an open ear might help bring light to new ideas and open discussion for concerns that might not have been addressed otherwise. Exercising an open mind and empathy will not only promote discussion, but will also strengthen the trust and relationships amongst individuals across departments.


As everyone should know, the primary reason any company’s doors are opened is because of its customers. Remembering it’s the basis of having the CEO position is imperative and will provide proper perspective when establishing organizational objectives. Giving the customer reasons to keep coming back will continue to pay dividends for the entire company.


By no means is holding the title of CEO an easy assignment. Countless duties while having to answer to employees, shareholders, customers, the media and even sometimes Congress is, incontestably, a tall order. Nonetheless, it must be accomplished and can be achieved with the right mindset. To the virtues previously mentioned, if they can be exercised effectively and gracefully, it will make the responsibilities of being CEO a much greater pleasure to experience.

Top Qualities Of An Effective CEO
By Stephen D. Simpson, CFA | September 22, 2011

With Apple's (Nasdaq:AAPL) near-legendary CEO Steve Jobs heading back to semi-retirement and Hewlett-Packard (NYSE:HPQ) recently changing the name on the door of the executive suite once again, the quality of executive management is a hot topic. Time and time again, the markets have proven that even companies in low-growth or commodity industries can offer winning stocks on the basis of exceptional management. Likewise, the markets have shown that few stocks can thrive for the long term with suboptimal leadership.

What, then, goes into making a CEO and how does he or she build value for shareholders?

The Traits of Highly Effective CEOs

Unfortunately, there are no objective quantifiable markers of a good CEO. Great CEOs have come from the Ivy League and from Nowhere State. Likewise, good CEOs have had deep backgrounds in a single industry or wide-ranging careers across many functions and sectors. Nevertheless, a few key traits seem to come up over and over again.


Arguably nothing is more important to a company than a CEO who understands both the market today and where it will be tomorrow. There is a famous quote from Walter Gretzky, father of hockey legend Wayne Gretzky, that goes "skate where the puck is going, not where it's been," and CEOs would do well to take this to heart. Bill Gates understood the potential of the PC before many others, just as Steve Jobs understood the potential of mobile computing, and those visions helped build their respective companies. Consequently, this is a key CEO trait and a key component of long-term success. For companies to stay strong, it is vital to understand what the customer is going to want in future, maybe even before the customer knows it.

Execution and Organization

CEOs do almost nothing on their own. Warren Buffett does not quote rates for Berkshire Hathaway's (NYSE:BRK.A) insurance businesses and McDonald's' (NYSE:MCD) CEO isn't slaving away over a grill. What makes for a successful company is the ability to identify quality managers at all levels of the organization. CEOs have to find quality vice presidents, those vice presidents have to find quality managers and those managers have to find good workers.

A corporate organization has to be functional and efficient. Multiple layers of bureaucracy can slow things to a crawl, demotivate employees and quash new ideas. Likewise, there has to be accountability and execution at all levels. Good CEOs build good organizations, populate them with good people and then make sure the right incentive structures are in place to keep it all moving forward.

Candor, with Compassion and Pragmatism

Arguably the most important attribute of a CEO, beyond his or her own integrity, is a sensitive "BS meter" regarding everyone else's integrity. CEOs need to know when they're dealing with suppliers, customers or co-workers who cannot (or will not) deliver what is expected of them. Along the same lines, while a CEO needs to be demanding and expect high standards to be achieved, he or she cannot be so harsh or volatile that underlings prefer to lie than deliver bad news.

Likewise, successful CEOs do not rely upon mass-firings to cover up their own mistakes. Sometimes there is no choice but to close an under-performing business and fire the workers, but all too many CEOs curry favor with Wall Street (and their board of directors) by large-scale firings aimed at momentarily boosting margins - all without a hint of irony that it is often the same CEO who boldly pushed the company to hire those workers to fulfill his or her "growth strategy."

How CEOs Build Value

Right Markets, Right Times

A good CEO should be able to build value in any industry, but long-term value creation is preconditioned on a healthy underlying market. IBM (NYSE:IBM) saw the future of mainframe computing (and then PC computing) and made sure that it was ready to enter more promising markets like storage and IT services.

Likewise, DuPont (NYSE:DFT) has a long tradition of developing new markets and then leaving them behind (or deprioritizing them) as they transition from growth to cyclical growth.

Driving Hard Bargains, but Not Too Hard

Here again there is a delicate balance - a balance that the best CEOs seem to intuitively understand. It is important to be efficient and to be a hard negotiator. At the same time, long-term corporate success is predicated upon hiring good people and keeping them motivated to continue working hard. Fear motivates for a while, but eventually quality workers tire of the stick and leave the company in search of an employer that will give them carrots instead.

Along similar lines, good CEOs understand that their companies are part of a food-chain and it is difficult to succeed by beggaring partners. Companies like Apple, McDonald's and Wal-Mart (NYSE:WMT) demand a lot from their suppliers, but they don't look to put them out of business. Put differently, a good CEO understands that a cow can be milked for years, but can only offer up steaks once.

Managing for the Future, Not the Mirror

Quality CEOs generate above-average returns on capital, something that comes about largely from strong margins (an efficient operating structure and strong brands) and efficient use of capital. Often this means running a lean, efficient structure that is no bigger than it has to be and having a CEO who is willing to jettison businesses that do not (and cannot) earn a satisfactory return on capital.

That seems obvious, but it is difficult in practice. Most CEOs have big egos, but you have to have a healthy ego to want the responsibility of that job and withstand the challenges. In lesser CEOs, that ego can manifest as a drive to run as big of a company as possible - with bigger taking the place of "better." Many CEOs regard their employer as "their company" and run it like a medieval lord would run a fief, and not as an employee running a business on behalf of shareholders. Likewise, a CEO who cares more about being named to industry "roundtables" or showing up regularly on CNBC is likely managing for the mirror and not for the shareholders.

The Bottom Line

Unfortunately, there are few inarguable quantifiable ways to evaluate CEOs, and what few ways exist are almost always backwards-looking statistics like return on capital. Still, shareholders can listen carefully to how CEOs communicate with them, monitor the types of decisions the CEO has made in the past and evaluate whether the company operates a sustainable model - not wasting money or capital on vanity projects or unsalvageable businesses, but not stinting on research or fair compensation.

As few things are more important in the long-term success of a company than quality management, it is very much worth an investor's time to do thorough due diligence on a CEO and the vision he or she has for their enterprise.

How Corporate Culture Affects Your Bottom Line
By Janet Fowler | December 26, 2012

In an economy where raises and promotions may not always be financially feasible, what can employers do to improve employee retention? Though many companies may be tempted to overlook corporate culture as a means of improving their bottom line, some companies have found that effectively building and maintaining a positive corporate culture helps to improve productivity. Ultimately, corporate culture is developed and impacted by society and other cultural aspects; however, it is largely formed by the attitudes of the employees within a company and the procedures enforced by that organization. It is something unique to each and every organization.

Find Flexibility

Do you find that your employees are constantly clock watching, waiting for five p.m. to roll around so they can bolt out the door? Although it may seem counterintuitive, some companies have found that allowing for flexible work schedules has increased worker productivity instead of decreasing it. Workers find that they feel trusted by their employers when they aren't being constantly policed, allowing them to get their work done as they see fit so long as the job is done on time. This also allows workers to find a greater work/life balance, leading to a happier, healthier workforce.

Promote Creativity

Creativity should be promoted within the workplace. Many organizations have fostered creativity by creating open-concept workspaces that allow for teamwork and a certain amount of freedom. This allows employees to collaborate and work effectively, creating a sense of community within the office. This in turn promotes employee innovation and creativity in their approach to work, often allowing employees to quickly identify successful solutions in dealing with workplace issues.

Time for Fun

Though it may be often said, it is probably true that we typically spend more time with our coworkers than we spend with our families. For this reason, finding ways to make work fun can dramatically improve morale in the workplace. Things such as company events or friendly competitions can improve both loyalty and performance.

Approachable Leaders

A lousy manager is a common reason for leaving a job. An excellent boss, however, can have the opposite effect. Employees look for supervisors and managers who are clear communicators and don't micromanage. This allows employees to feel supported and free to ask questions without fear of retribution, helping to improve the overall communication within the office.

United We Stand

Creating a strong and respectful team dynamic ensures that your employees will look out for one another and work together to succeed. Organizations that place a high level of importance on creating a unified team will often seek new employees who are a proper fit for their company's corporate culture instead of simply hiring the most qualified person, only to find that they don't match with the organization's ideals. In turn, employees feel compelled to work together to achieve the greatest results.

Recognizing Excellence

Companies that recognize outstanding performers often enjoy a greater level of loyalty from their employees. Recognition can come in many forms, including promotions, performance bonuses and other incentives or rewards; however, recognition does not always need to be formal or tied to compensation. In fact, a simple pat on the back or a thank you for a job well done can do wonders to encourage employees to keep giving it their all.

Accountability and Loyalty

Greater accountability and employee loyalty are some of the main perks that come from a less-structured, more-supportive work environment. In fact, employees who feel like they play an important role in the success of the organization generally strive to do the best job they can, often performing at a higher level than those who are closely monitored or policed in the workplace.

Solid Service = Limitless Growth

Making customer service job one ultimately leads to a company that can grow and flourish. Each department should clearly understand who its customer is. Some departments serve clients or customers within the company, while others serve external clients outside the organization. If a company focuses on providing the very best service possible, however, the company's customers will probably be happy, coming back for repeat business and sharing their positive experience with friends, family and business associates.

Contagiously Positive

It's a simple fact that a smile can be contagious. Happy employees talk positively about their employers. This in turn can shed a positive light on your organization, leading to increased awareness about your company and translating to improved sales.

The Bottom Line

Every company that moves toward creating a unique corporate culture goes through growing pains, and not all strategies will work equally well for all companies. It really depends on finding the right mix of freedom and creativity that will work for your industry and for your employees. There is, however, no denying that happy employees are typically much more eager to come into work and give an honest day's work - which will hopefully translate to greater sales volume and employee retention. Bear in mind that each and every time an employee leaves your company, there is lost productivity, as a replacement worker must be recruited and trained. It is often a lot easier and more beneficial for an organization to keep its experienced and outstanding staff happy and productive.

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