Human Resource Knowledge

Arduous tasks of a CEO

The bottleneck is at the head of the bottle, goes an old saying. No business is likely to be better than its top management, have broader vision than its top people, or perform better than they do. A business especially a large one may coast for a little time on the vision and performance of an earlier top management. But this only defers payment and usually for a much shorter period than is commonly believed. A business needs a central governing organ and a central organ of review and appraisal. On the quality of these two organs, which together comprise top management, its performance, results and spirit largely depend.

The best thing any successful CEO or President can do as a parting gift to the organization is to pick a most appropriate and worthy successor.

The CEO of a company has to accomplish a number of tasks. He thinks the business of the company and has to develop and set over all objectives. He makes the basic decisions needed to reach these objectives and has to communicate the objectives and decisions to his management colleagues. He educates these mangers in seeing the business as a whole and helps them to develop their own objectives for accomplishing the overall business objectives. He measures performance and results against the objectives. He reviews and revises objectives as conditions demand.

The chief executive makes the decisions on senior management personnel. He also makes sure that future managers are being developed all down the line. He makes the basic decisions on company organization. It is his job to know what questions to ask of his managers and to make sure they understand what the questions mean. The CEO coordinates with the product businesses within the company and the various functional managers. He arbitrates conflicts within the group and either prevents or settles personality clashes.

He has to take personal command in an emergency related to the company. Let us study the case below,

One of the main plants of a company had a fire interrupting all their schedules. Rush work had to be shifted to other plants and some had to be subcontracted to closest competitors. Other work had to be postponed. Important customers had to be placated or substitute sources of supply had to be found for them. An immediate decision had to be made whether to repair the plant, one of our older ones, or build a new, modern one from scratch. The plant could be repaired in six months at a cost of two million dollars or build a new plant which will cost ten million dollars and will take almost two years but will have double the capacity of the old one and significantly lower costs. The task of the CEO here is to first take a right decision. If he goes for new machinery, it meant changing all production schedules and all out capital-expenditure planning. It also meant negotiating a six months’ bank loan to tide over until the company could float bonds that could not be expected to issue for another year or so. For four weeks the new president spent day and night at the office and laid out plans for the transit period and could also seek the approval of Board for the capital expenditure.

There is a case of a CEO where he had to take personal charge when one of the company’s businesses got into serious trouble. He himself, with the company’s counsel and an outside law firm, worked through the preparation for an important patent infringement suit brought against the company and spent almost two weeks on the stand as one of the chief witness for the defense.

Next on this list of the things which the Company President does came the responsibility for capital expenditures planning and for raising capital. Whether it is a bank loan and issue of bonds or a new stock issue, the president takes an active part in the decision and in the negotiations. He also recommends dividend policy to the board. He is concerned with relations with stockholders. He answers questions at the annual meeting. He must be available to the security analysts of the big institutional investors, such as insurance companies and investment trusts. He must see the financial writers of the major newspapers and business magazines.

A President has to instruct the Company Secretary to prepare the agenda for the monthly meeting of the Board of Directors, present the reports there and be ready to answer questions. And he must relay Board decisions to his managers.

The President new or old has a host of public relations duties.

Once a month or as and when required he may have to spend a couple of days in the capital to attend meetings of governmental advisory boards or work related to his own Company.

In some cases the CEOs have to fulfill social responsibilities serving on the board of the health or educational foundations set up for the children of employees or even for outsiders.

They may have to attend one or two trade association meetings each year usually making one short speech and summing up data related to the association or organization structure. Once a year, the CEO has to open a convention of company’s dealers with a speech about new products and sales plans and concluding such conventions with a grand dinner with a dignitary as a Chief Guest.
The final item on the list: each year a CEO may have to visits personally the company’s plants in different parts of the country and other places abroad including smaller plants.

Therefore it is all the more necessary for the CEO to visit all the plants including smaller ones to make the employees and all the managers feel they are part of the same company and are on the same team. Only a visit from the “big boss” can do that. Also the president himself learns more on these visits than he could ever get reading reports in his office.

In conclusion the tasks for a CEO or President are too many but he should not get distracted from the main objective of a good bottom line and associated improvement for the company.

Labels: Management

posted by Paresh @ 7:57 PM