Saturday, September 22, 2012

The CEO's job

I don't often have the opportunity to post on my blog. Usually what I'm doing with Energy Cache is not something that I can talk about. However, recently I had a great experience that I thought was worth writing about.

The job of the CEO is to best manage the company on behalf of the board, who in turn, represent the shareholders. Therefore, it can be an easy assumption that the CEO reports to the board and attempts to meet their needs. While simplistic, and often generally correct, it is a false simplification. There can exist the possibility that different board members have conflicting needs/desires. Under the "serve the board members" model, this puts the CEO in a difficult role if he or she is trying to make everyone happy.  However, truly serving the board means doing what's best for the company, regardless of whether you make people happy. People are looking at you for the decision on what is right - not what everybody else thinks is right (and certainly, not what's right for them). 

Not making these decisions, even to attempt to address the wishes of those you report to, is a breach of duty.  This is a key distinction why the CEO's job differs greatly from many other jobs out there.  In pretty much every other job, your job is to support your customer, who is almost always the person you report to.  With the CEO, it may seem that the customer is the board, but it isn't.  It's the company.  I'll say that another way.  A CEO may serve at the pleasure of the board, but the CEO doesn't serve the board - he serves the company.

As CEO you aren't paid to be popular. You are sometimes paid to be unpopular - even if the people that you are unpopular with are the ones paying your salary.

I saw that recently, it is something I'm going to regularly have to force myself to remember, and thought it was worth talking about.


Phil Bangayan said...

I think you touch on two really good issues here: board composition and the true boss. As mentioned, sometimes different board members have conflicting needs/desires. That underlies to me the importance of making sure your investors (who typically have board seats) are aligned with your company and other board members as well. But I'm sure you picked wisely.

The part that resonates more with me has to do with who's the true boss. Is it only the customer? In a large organization, we have many stakeholders we need to please. Depending on the company, these stakeholders could include employees, shareholders, parent companies, Wall Street, and partner companies, as well as customers. And depending on the stakeholders, their goals may or may not be aligned, as you pointed out in your own example.

In the end, my belief is that a leader is tasked with making the right decision, not the popular decision. Otherwise, we could replace a leader with a polling machine.

Kereta Mini said...

I am the CEO of a toy company
Nice to meet with you...