It may sound strange, but it is true. In this competitive environment, most CEOs are driven by performance alone and this performance anxiety is percolated down to the lowest in the hierarchy. Today’s workplaces are full of tension caused by performance deadlines which are monitored, sometimes, almost on an hourly basis. In this humdrum, every person in the senior and top management seems to be caught up in a relentless pursuit of goals.
While there is nothing wrong with this as performance is the key to survival, the issue is that everyone in the top management seems to be doing more of the same thing, with the result that the urgent drives out the important. Issues such as readying the organization for the future in terms of leadership bench strength, putting in place the right human resource policies, building a culture of communication and response, creating a brand, and establishing the architecture of governance and ethical conduct, often receive diluted attention despite good intentions.
Most Indian corporate Boards, barring some honorable exceptions, devote hardly any time to discuss the issues of succession for pivotal positions, and the issues of human resource development, including the review of existing systems in the context of future challenges. Obviously, the Boards are also often engaged in project discussions, and approvals and compliance on various operational matters. Strategic issues such as building intangibles do not receive the attention they deserve.
I strongly believe that the CEO’s main role is to take foundational steps in preparing the organization for the future. Such steps should include the following:
focus on the most fundamental problem that the organization is facing which usually has been procrastinated for far too long. This could be an issue of structure, the process of decision making, choice of centralization vs decentralization, issues related to inter-departmental co-ordination, or issues of morale and motivation across the organization. The key issues would vary from one organization to the other;
build leadership at three levels, namely operational (branch level), business (circle or divisional level), and strategic level (functional general managers and above). The CEO has to take effective steps to ensure rigor in the process of identification, selection, and promotion of leaders, placements in a manner that gives the incumbent rounded exposure, and appraisals that are conducted in an honest and transparent manner. This is the key job that the CEO should dedicate significant time and focus on, towards building the next generation of leadership;
build an internal culture that is responsive to markets, customers, and employees. Lack of responsiveness is a perennial problem in organizations. Communication with customers and employees are often not prioritized, and many a times, the content of communication lacks sensitivity and empathy. Are CEO’s creating listening organizations where every feedback from customers or employees is discussed and due action taken where necessary?
use and respect field wisdom for its understanding of customers, earned through proximity with them. Giving voice to the voice of field managers always keeps the organization grounded in reality. Let us face it that all this wisdom does not exist in our “corporate bunkers”. The CEO needs to demystify the relationship between the corporate office and the field;
ensure highest standards of governance and ethics, and promote great degree of transparency and openness across the organization. Building company reputation is the key aspect of the CEO’s role.
What I have mentioned are essentially Intangibles. I dare say that it is intangibles that drive tangible outcomes. Research has now confirmed that intangibles contribute to more than 50% of market capitalization. How do P/E ratios vary widely across companies, despite similar earning levels? It is because of reputation, governance, brand, and leadership; they all contribute to organizational health and the creation of a sustainable organization of the future. Sustainable organizations need performance + health.