Much is written about the characteristics of successful chief executives: decisive, adaptable, visionary, intense conviction. What strikes me, however, is that few of the articles published on this topic mention what would seem to be the most obvious quality: the ability to attract premier talent and get them to perform at the highest level. Ultimately, that is what turns companies into winners. If so, CEO success should really be viewed as a byproduct of developing a high performance culture that drives consistent growth. So what separates the best chief executives from the rest when it comes to building that kind of culture?
The foremost business leaders are better than their competitors at building a unified financial vision for growing the business. They create alignment between what is economically important to employees and what matters to shareholders—growth. Certainly, the need for unity extends beyond just fiscal issues. However, if the workforce and shareholders are not linked in their understanding of the financial performance needed to drive company growth, then one faction or the other will end up unhappy—if not both. To be content, owners will need a satisfactory return (and ideally a superior one) on the investment they have tied up in the business. And employees similarly expect to get a return on the commitment and engagement they pour into the company.
So how is this kind of unity created and sustained?
Building a Unified Financial Vision
There are three dimensions to a unified financial vision that endures.
1. Line of Sight: Successful business leaders are good at getting their employees to see the relationship between:
- The vision of the future company.
- The business model and strategy required to achieve that vision.
- The employee’s role in that model and strategy—and what’s expected of him or her in that role.
- How the employee will be rewarded for fulfilling those expectations.
When this kind of alignment is present in a company, there is little room for misunderstanding priorities or performance standards. Employees see what is required for shareholders to achieve their growth goals and why it should matter to them as an individual role player.
2. Stewardship: The best chief executives build a performance culture on the foundation of a stewardship mindset. They instill in their workforce an owner’s thought process, results-orientation and reward system. Premier business leaders attract talent that is motivated by a role to be fulfilled, not just a position to be occupied. They draw people who want to work for an organization that makes clear the outcomes for which they have responsibility, and the resources at their disposal to achieve them, and then lets them loose to “own” those results.
Stewardship will be either encouraged or inhibited by the company’s pay strategy. If you want employees to think like owners (become stewards), then the way they are compensated should mirror how shareholders achieve their earnings—at least long-term. At a minimum, this means the chief executive’s approach to value sharing must maintain a balance between rewarding short and sustained performance. Employees must be able to adopt a long-view in their decision-making without surrendering their attention on what the business needs to achieve in the next three, six or 12 months. If your rewards strategy pushes their attention too far in one direction at the expense of the other, then the unified financial vision for growth crumbles—or at least is stifled.
3. Partnership: High performing CEOs don’t want employees. They want growth partners. They want “gamers,” people willing to get themselves dirty, make sacrifices and do what is necessary to succeed. So, how do they achieve that?
A sense of partnership with employees is achieved by promoting a compelling purpose the business and its workforce can only achieve together. And the most successful business leaders are expert at finding out how and why that purpose would matter to their employees. Sherry Hakimi, founder and CEO of Sparktures, explained it this way in an article for Fast Company:
What makes some companies wildly successful while others flop?
Starting and surviving in today’s economy is hard, but the companies that figure it out have something in common: the pursuit of purpose, alongside the pursuit of profit. A purpose mobilizes people in a way that pursuing profits alone never will. For a company to thrive, it needs to infuse its purpose in all that it does.
An organization without purpose manages people and resources, while an organization with purpose mobilizes people and resources. Purpose is a key ingredient for a strong, sustainable, scalable organizational culture. It’s an unseen-yet-ever-present element that drives an organization. It can be a strategic starting point, a product differentiator, and an organic attractor of users and customers.
Note that Sherry emphasizes that purpose and profit are not mutually exclusive pursuits. In fact, she suggests that purpose is the mobilization spark that gets employees to understand why profits matter. It is the key to fulfilling the company and employee unified purpose. She offers this example:
Among its initiatives as a certified B-Corp, Etsy has collaborated with governments in Rockland, Illinois, as well as in New York to offer free entrepreneurship courses for underemployed and unemployed residents. Though it’s not mandatory, the course also includes assistance in setting up a store on Etsy’s platform. This is shared value at its best; Etsy adds more artists and artisan sellers to its platform while empowering underemployed and unemployed participants with the ability to generate supplemental income—or even a full-time job.
Purpose-fueled profits are lasting profits. And lasting profits create enduring companies that can, in turn, continue to support worthy purposes. This is the aim of business leaders who are succeeding at the highest levels.
Line of sight, stewardship and partnership form a powerful combination to create a unified financial vision for growing a business. And creating that kind of alignment should be a primary criterion for measuring CEO success—in my humble opinion.