The vital role of the CEO

If the business owner isn’t performing the duties of a CEO, who is?

THE FABRICATOR® APRIL 2013

April 19, 2013

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If a metal fabricating company's CEO is running the plant or acting as a salesperson, who is guiding the business? For such companies, operating without a CEO can be a very dangerous situation.

The vital role of the CEO - TheFabricator.com

Much of the metal fabrication industry consists of family businesses. You may be a second- or third-generation leader. You may have grown up in the business. When it comes to business leadership, your only role models have been family members. You wear many hats and feel obliged to do the best you can in various roles to keep the business running. Let’s be honest: Wearing so many hats, you may not do every job well, or value each equally.

A small fabricator may give the top job any number of titles—owner, president, chief executive officer. For this article, we’ll stick with CEO. I’ve asked many CEOs in this business how they spend their time. They may do the financial work, quote jobs, act as the top salesperson, even play the role of plant manager. When I ask who is doing the CEO’s job and describe some of those duties, the typical answer I get is, “I do that at night, or when I put the fires out.” In essence, these businesses are operating without a CEO.

As a CEO, you may be both the team owner and head coach. Both jobs are important and each has unique duties, but ultimately the owner is accountable. When a team can’t win, the head coach is replaced. Likewise, when you are not performing your duties, or you do not find someone else to do them, the business suffers.

The CEO’s Role

In his book, The Four Obsessions of an Extraordinary Executive, Patrick Lencioni describes how the CEO builds and maintains a cohesive leadership team and also creates, communicates, and reinforces organizational clarity.

In another book, The E Myth Revisited, Michael Gerber describes business owners who work “in” their business rather than “on” their business. Working “in” the business is where the rubber hits the road—sales, quoting, operation, machine-tool technology, and so on. But a business also must do things in a predictable, orderly way. People in the business must produce consistent results and offer the services customers want, every time. This comes from working “on” the business.

This can include addressing shortcomings or misbehavior by members of the leadership team; stopping politics from affecting job performance; and implementing recognition and reward systems. An important goal is to articulate the values that underpin the culture and that guide employees’ behavior in their daily work.

Here is where the CEO’s role comes into play. No matter how small the business is, the CEO must:

  • Decide what the business will be.
  • Build a cohesive management team and set the goals for the team.
  • Determine the values that will underpin your business.
  • Ensure the management team is working together, and make sure employees are trained and that the business is operating efficiently.
  • Hold the management team accountable for results.
  • Install a system that allows people to deliver the consistent products and services customers want.

If you are not performing these duties, who is? This is the trap for so many business leaders. CEOs jump in to do urgent work that is not being done. If the quarterback isn’t performing well, do we ever see the coach go into the game? Of course not, but in business—especially a smaller business—the coach walks onto the field all the time.

When you do work that should be performed by someone else, you aren’t necessarily helping the business. This doesn’t mean that occasionally, because of illness or some rush, you can’t step in. But how frequently are you stepping in, and how much time do you devote to your role of CEO? To build a business that can run effectively and efficiently requires a management team, with each member having specific roles. A CEO can’t do everything.

Many times CEOs of small businesses decide they really don’t like the CEO role. Consider one case in which a second-generation fabricator enjoyed the sales function. Besides sales, he was bogged down doing financial analysis and much more. He was not happy. He was wearing out, and many of the CEO duties weren’t being done.

I asked him why he didn’t bring in a general manager to do the work he didn’t like to do. He said it was a combination of pride and feeling as if he failed. I reminded him he is and will be the owner, and he can do any job he chooses. His business card can say CEO, and he can be the head of sales. Eventually, he did bring in a general manager.

Another CEO I spoke with said he didn’t like managing people. He didn’t like reviewing key business metrics and holding employees accountable. Instead, he enjoyed sales and preparing company quotes. That is where he spent his time. His lack of attention to the CEO role was affecting the business.

When I suggested he bring in a general manager, he first said no. As we discussed his struggles, he began to shift his view, and within a few months brought in a COO to run the operation, freeing him to do what he liked to do. He said he was much happier spending his day doing the work that was most meaningful to him.

Important Questions

As a CEO, ask yourself five questions, the first three being:

What duties do I typically focus on?

Which do I avoid or only do after everything else is finished?

Why am I not completing them?

Employees everywhere avoid certain tasks they think are a hassle, however essential they may be. Some do those first, while others put them off as long as possible, hoping they will go away. As a CEO, why do you avoid them? Is it because you really don’t like doing those duties? Perhaps those duties aren’t your strong suit. Perhaps it’s time to hire a general manager to assist in performing those duties.

Whenever I consider a candidate for any job, I assess two important criteria: capacity and motivation. This is where the next two questions come into play. I ask myself:

Does the candidate have the capacity (potential, skills) to do the job, or can he or she learn them within a reasonable time? If the candidate does not possess the skills or cannot acquire them easily, I need to select another candidate.

Does the candidate have the motivation and desire to do the job? Yes, this can be difficult to determine. You cannot train motivation and desire to do a good job. Those are innate qualities of an individual. If someone lacks motivation, you need to select another candidate.

These criteria of capacity and motivation also apply to the CEO role. Ask yourself, Do I have the capacity to perform the key duties, and do I have the motivation to do the work required of the CEO? If you feel you do not, don’t think it’s a crime or character defect. Chances are you have become the CEO because you inherited the position. This is no reason to stay in the role. As an owner, you have choices.

The role of the CEO is very challenging; when performed well, it can produce strong results for the business. No CEO is perfect, and no CEO does all things well. But it’s also difficult for a CEO to get honest, candid feedback. That’s why I encourage CEOs to use the services of an executive coach, or have a trusted adviser who can help them see and address their shortcomings.

It is important for all CEOs to perform duties only the CEO can do effectively for the business to prosper. Forward-thinking business owners recognize they may not be the best CEO for the business and, ultimately, hire someone who can perform this vital role.

Traits of a Poor CEO

In The Five Temptations of a CEO, Patrick Lencioni lists several temptations that keep a CEO from being effective. They sometimes choose status over results, popularity over accountability, certainty over clarity, and harmony over productive conflict.

Similarly, in Why CEOs Fail, co-authors David Dotlich and Peter Cairo describe 11 ways a CEO can hurt a business. These character traits may seem obvious and easy to avoid, yet they are more prevalent and widespread than you might imagine:

  1. Arrogance. They are right and everyone else is wrong.
  2. Melodrama. They always are the center of attention.
  3. Volatility. Their mood shifts are sudden and unpredictable.
  4. Excessive caution. The next decision might be their first.
  5. Habitual distrust. They focus on the negatives.
  6. Aloofness. They disengage and disconnect.
  7. Mischievousness. They know the rules are only suggestions.
  8. Eccentricity. It’s fun to be different just for the sake of it.
  9. Passive resistance. Their silence is misinterpreted as agreement.
  10. Perfectionism. They get the little things right while the big things go wrong.
  11. Eagerness to please. They want to win any popularity contest.


Mark Ernst

President
Ernst Enterprises LLC
1218 Wycliffe
Irvine, CA 92602
Phone: 847-875-4553

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