What Does it Take to be a Savvy CEO? November 7, 2006
Posted by nielsengroup in Executive Development, Managing Change.add a comment
All new CEOs are confronted with tremendous challenges and even the normal everyday ones can be quite overwhelming. So how can a CEO ensure success in the face of tremendous pressures?
The good advice from the library of business books applies: make sure you have the right people ‘on the bus’, develop solid plans, delegate authority and accountability, get out of the way and….
A critical point in successful businesses is when its time to bring in more help. Typically, the first external support a CEO hires is an accountant, then a lawyer. Good decisions, but then the entrepreneurial CEO tries to manage difficult logistics problems, people chaos, dealing with building problems, purchasing…and on and on. Usually things work ok, at least for a while, and then the guaranteed catastrophe happens. Now what? The most common self defeating behavior: we try to be an expert in every area. It’s just not possible… and run a profitable business.
You don’t try to fix the plumbing or the electrical systems by yourself, do you? You know something about electricity, but you also know you don’t know ‘enough’. So you call an electrician. And you know something about working with employees with poor attitudes or performance, but this is not your area of expertise. Time to call in the experts to help you ‘get the lights back on’. Or when you have a mind boggling logistics problem, or when your sales are sluggish. Savvy CEOs know when to ask for help and they know it’s less costly in the long term.
The most natural behavior is to do it yourself or tell someone else how to do it, but the most effective behavior may be to step back and let others decide both what to do and how to do it.
Well, ‘stepping back’ is actually quite a personal challenge. Many CEOs have grown up with their businesses and are exceptionally savvy about the inner workings of their industry and their own company. So the CEO is pretty confident that he knows the way to get things done.
The most self defeating behavior of all is to not ask for help.
It’s Always About People www.thenielsengroup.com
Managing the private equity relationship November 6, 2006
Posted by nielsengroup in Managing People.add a comment
Life as you know it has changed. You have private equity investors.
The trends are shifting. Are privately held companies becoming more like public companies? The move for a privately held company to assume debt in the form of ownership by a private equity firm has changed the landscape. The private firm, once a stand alone entity, with the ability to make quick, responsive decisions, to invest in new projects, capital equipment as company needs dictate, now experiences the challenges of more structured decision making, more people involved in the decisions, more approvals, and most vexing, a requirement demonstrate profitability quarterly.
This last demand is a most onerous challenge. Now the leaders must approach their decision making much like public companies with quarterly results pressure and yet another ‘boss’ looking over their shoulders.
How will this growing trend do to change the world of privately held businesses? In the nineties we experienced the dot com boom…and it seemed that dot coms could do no wrong…. If you were looking for a place to realize terrific financial growth, invest in a dot com. We came to learn that the dot coms that succeeded were those who managed well. “Good management is good management” said Harvard University’s Rosabeth Moss Kanter.
Today the ‘hot’ area appears to be private equity. Lots of money flowing in, lots of opportunity to invest in privately held companies, turn them, make your fortune and move on.
The problem is the individuals companies are now managing significant debt. The good news: the company has been able to use the money infusion to penetrate new markets, generate higher profits, and create growth. Or perhaps, they are simply burdened with more debt.
But now the way the company is managed must change. Obviously some change is inevitable and necessary….but managing to quarterly financial expectations can create barriers to innovation and reinvestment in the core business.
Someone may have seen great return and maybe the only lesson is ‘Shame on me’ for not being a part of the investment team. So be it. But if you are the CEO left to manage the lesson you may learn is, ‘Be wary of quick fixes. They may bite more than you ever thought possible.’
Managing the new relationship with the equity owner is one more crucial mission for the CEO. This mission unmet can result in a new CEO at the helm. Life as you know it has changed.
Managing the new relationship presents tremendous personal and professional demands. Yes, you know how to manage your company as it has been, but the world of private equity presents additional challenges. Get some help from someone who has learned t manage up successfully.
Before you sink, get some help.
The Nielsen Group It’s Always About People.
Terminating a Key Manager November 1, 2006
Posted by nielsengroup in Executive Development, Managing Change, Managing People.add a comment
One of the most difficult management challenges for the small to midsized business owner or CEO is to release a long employed key manager who is no longer performing as needed in the company. These typically are well liked people whose poor performance has been tolerated for far too long. It is critical to manage terminating employees in a way that respects long service, former stature and, most likely, many contributions of the past. Frequently the pressure on the CEO requires that a move be made and this feels quite painful, and frustrating to the CEO. There are ways to assist the CEO, and the key manager, to make the right decision while maintaining dignity for all. We work with CEOs in managing their most diffiuclt people problems.
It’s Always About People.
