Thinking Managers

Robert Heller of questions what company chiefs should really be accountable for.

The burden of leadership and accountability

More than ever, chief executives are the pinnacles of the management system. They possess immense power, subject only to the board of directors' confidence. That trust in their leadership is still too often misplaced, but still less easily retained than in years gone by. It isn't that boards are any keener on exercising their authority, or any stricter in demanding acceptable results; rather, investors have become far more restless about 'under-performance'.

So what standards of performance should be expected from the top people? There is a general approach to vest them with total responsibility for the success or failure of the organisation. That applies all the way from a global business to local government. However, the vesting is vague. Appointees are rarely given, or asked to provide, a list of objectives or criteria by which they can expect to be judged. That is how delegation works in well-run companies, of course.

Why should the chief delegator escape the same accountability? Actually, common objectives and criteria do exist for all CEOs in all businesses, although they are generally unspoken. They must be able to reply in the affirmative to questions such as:

  • Does the company provide only profitable goods and services that customers want and at prices that are readily paid?
  • Are goods and services supplied at highly competitive and constantly reducing costs, with constant improvements in physical efficiency and productivity?
  • Does the business rate more highly than its very best competition on all the aspects most important to the customer?
  • Is the business tapping the widest possible markets for its existing products and services, geographically and by segment?
  • Are new products and services coming onto the market that will add significantly to the company's competitive strength, as and when needed?
  • Are there powerful reasons for the customers to buy the company's products and services rather than anybody else's?
  • Are there policies, plans and strategies that should sustain the company's strengths into the indefinite future and go on giving Yes answers to the six questions above?

A number of trade-offs and compromises are involved in those Seven Critical Questions. But if you neglect them, he harm done will offset much good done in other areas. By concentrating on all the critical seven areas, you significantly improve your chances of answering each satisfactorily.

Another deeply significant aspect of the Seven Critical Questions is that you can translate them all into measurable objectives and criteria. If these targets are not met, the CEO is underperforming. That might not be because the leader has personally failed to 'make the numbers', but because those working lower down the organisation have not been adequately motivated, organised, managed and resourced.

Making sure these demanding needs are met is an intimidating but essential task, and top people who fail to meet the needs cannot be left on top. Leave them, and you risk your under-performance becoming systemic, and immensely difficult to correct, even under new leadership.

About the author
Robert Heller is one of the world’s best selling authors on business management.

  Robert Heller