Practices of an Effective CEO

Is infinite knowledge about one's company all that is required of a CEO? The answer should be a resounding "No". Without solid leadership skills even the most informed CEO will fail. This is not an overstatement…it is a proven truth.

According to Investopedia.com, A CEO is defined as: "The highest ranking executive in a company whose main responsibilities include developing and implementing high-level strategies, making major corporate decisions, managing the overall operations and resources of a company, and acting as the main point of communication between the board of directors and the corporate operations".

Because we know that the CEO has the final word regarding corporate decisions, it is expected that he/she is armed with all the pertinent facts associated with the decision at hand. On the other hand, can we also expect that he/she has the courage to utilize that information to implement and/ or modify strategies that will benefit the company? Two inquiries almost always associated with a CEO's decision making process include a review of: What was expected to happen? opposed to What actually happened? Once all the facts are obtained, the CEO will review the ramifications reflected on the budget report. If prepared accurately and astutely, a budget report should:
- Describe the plan of action, including a calculation of any and all resources associated with the project:
- Compare actual expenditures with planned expenditures
- Compile precise accurate numbers on a continuing basis
- Report numbers first and then clarify what they represent
- Utilize accurate percentages rather than hard and fast numbers to facilitate management's most successful understanding of the data

The cash conversion cycle is another factor required to assist a CEO in making wise strategic decisions for the company. He/she must be provided with information that enables a determination of time required for:
- A sale to result in delivery
- An invoice to result in:

a) Payment from the customer
b) Payment to staff
c) Recovery of costs of goods
d) Payment of general expenses including commissions and marketing
e) Final realization of net profits from sale Information on expense ratios also remains an imperative requirement in the CEO's decision making process.

Appropriate data should include:

- Percentage of delivery cost to client
- Comparisons of cash conversion cycles as they relate to various products
- A determination regarding the significance of the difference

For the CEO's assessment to be truly comprehensive, it must be not only accurate, measured, and timely from a fiscal perspective, but also honestly representative of the relationships among the various functioning parts of the business. Then and only then, can an assessment be justly evaluated.

When all is said and done, the effective CEO will know where the company actually stands versus where it should be and render a verdict accordingly. It is here where leadership manifests itself, it is here that a true leader will emerge. A CEO must be an individual who enlightens and inspires his team. His leadership must be wise and motivating. In the words of John Quincy Adams:
"If your actions inspire others to dream more, learn more, do more and become more, you are a leader".



By Edward A DuCoin