As CEO, what decisions are truly yours to take, and which decisions should you be empowering other people to make?
This is a key question for any CEO or senior leader to answer, and it's a recurring topic of discussion amongst my CEO clientele. Failing to get clarity on this will result in disempowerment for your team and personal overload for you, the compound effect of which will be a significantly reduced impact.
Let's start with some obvious areas which aren't CEO decisions and don't need to be on your plate.
1. Functional decisions
Firstly, don't make decisions regarding anything directly within the sphere of responsibility of one of your team. This sounds obvious, but I can tell you that there are a large number of CEOs who make marketing decisions or financial decisions or operational decisions simply because they lie within their sphere of competence.
Let me say it clearly: you have executives to take those decisions; if you feel uncomfortable with them taking those then you should be mentoring them, developing them, or if you have failed that, replacing them.
2. Cross-functional decisions
The second set of decisions are those which fall between two or more organisational units. For example, your sales director makes the sales decisions and your marketing directors make the marketing decisions, but what about those decisions which impact both sales and marketing?
These might feel ideal areas for the CEO to intervene in, as the senior cross-functional leader.
Well, if you intervene there then you are setting yourself up as referee between two of your reports, and setting your team up for continual lobbying and jostling for position, instead of collaboration and cross-functional problem-solving.
Instead, why not ask the two leaders concerned to team up and arrive at a joint solution? As John Chambers (Cisco's legendary former CEO) liked to say, you might like to remind them that if they can't agree on a workable solution that puts the organisation's best interests first, then you might have the wrong execs on your team...
If you feel uncomfortable with them taking those then you should be mentoring them, developing them, or if you have failed that, replacing them.
CEO decisions: 6 key areas of focus
So then, what's left as CEO decisions and responsibilities? It turns out quite a few things.
1. Developing the executive team
As CEO, you should make the decisions regarding the composition and development of your senior leadership team. Don't outsource this to HR; it's your #1 lever for increased organisational impact. If you're interested in this you might like to check out our email series on Taking Your Team from Good to Great.
2. Managing your direct reports, and helping them to do likewise
As well as developing the collective impact of the executive team, you also need to manage your direct reports. They may be experienced leaders, but if you think that senior leaders shouldn't need managing then you might like to reconsider what management actually is - and stop seeing it as something remedial!
One overlooked area of focus is ensuring that your senior leaders are adequately managing their direct reports. If great management and teamwork is only found at the very top level, then the organisation has a problem. So put real attention on this second level of the management chain.
3. Setting the leadership tone of the entire organisation, and holding leaders accountable for their management behaviours
As CEO you have decisions to make regarding the overall leadership tone of the business; the values that are truly appreciated and reinforced, and those which are merely given lip-service. If the CEO does not hold leaders across the business accountable for expressing the core values and stated management behaviours, then nobody will - and organisational health will take a body-blow.
4. Owning & championing the organisational vision & mission
The CEO is the ultimate owner of the organisational vision and mission, and as such you'll need to make decisions to preserve focus and maintain momentum on this overarching agenda.
5. Personally sponsoring the #1 organisational transformation
As Geoffrey Moore points out in his book Zone To Win, the CEO needs to personally champion the #1 transformation project in the organisation. This transformation will require people to act in 'unnatural ways' because corporate culture, mindset and incentives have not yet caught up with the imperative to change. So as CEO you need to make some executive decisions to drive your #1 transformation project forward and give it the senior sponsorship it needs to succeed.
6. Managing an effective relationship with the board
Finally, the CEO is the primary interface between the board and the business, and you'll need to make decisions regarding how to create the most effective relationship possible between these two entities.
How this shifts your mental model
When you internalise these decision-making areas and CEO decision priorities, you'll see your role in much sharper focus.
For example, why should Chief Executives get involved in M&A? Well...
No, the reason CEOs should be deeply involved in M&A is to ensure that the acquired leaders will truly be an asset to the senior team (point 1 above), that behavioural integrity will be preserved (point 3 above), and that the overall mission and vision of the organisation will be accelerated by the transaction (point 4).
What other decisions should be the sole preserve of the CEO? Please leave a comment with your thoughts.