Friday, 8 April 2011

What is a CEO?

In an excerpt from his book “The Lowdown: Top Tips for Wannabe CEOs”, Richard Charkin of Bloomsbury Publishing talks about what a CEO is and what he or she does.

CEO: Chief Executive Officer has different meanings in different companies and in different industries. In my view, the unifying theme is that a CEO is the person who’s ultimately responsible to the shareholders to manage the investment that they made in the company. The role itself will be defined to some extent by the size of the company, its geographical location, the nature of its workforce and its customer base. For instance, the CEO of Microsoft is probably very different from the CEO of The Royal Shakespeare Company. However, each of them is responsible to investors, to customers, to employees, to suppliers and to business intermediaries.

What does a CEO in publishing do, besides answering to the stakeholders?

Well, in order to answer to the stakeholders you have to run a decent business. A decent business is one which fulfils its obligations to all involved with it. In publishing, this means authors, illustrators, designers, employees, distributors, printers, readers and shareholders. Getting the balance right is not easy, but it is the board’s job to help the CEO find that balance. So running a decent business in publishing – or I suspect in anything – is a matter of working with a board and helping it run efficiently. In many businesses, there are two boards. There’s a governing board (which includes non-executive directors) and the CEO is a servant to that board. Then there’s the executive board.

The CEO is the leader of that board and the CEO’s job is to ensure that there is the right structure to do whatever needs doing, that there are the right people in the right jobs in that   structure, that those people are properly motivated and indeed rewarded – for success, not failure, and definitely not for mediocrity.

Part of the CEO’s role is to help identify strategy for the company. For example: Are we going to become global, or shall we return to our domestic roots? Shall we move into new technologies or stick to the knitting? In other words, stick to what we know. Shall we go upmarket? Shall we go mass market? Shall we start completely new businesses, or adjacent ones?

 The CEO is also responsible for business growth. Growth itself is not always essential and indeed its pursuit has frequently led to disaster. However, standing still is rarely a successful strategy in business and a static or declining business is unlikely to attract the best management. Growth might come from acquiring other companies, or it might come from developing new organic growth points. Both routes to growth will certainly cost the business money.

There are two other specific areas for which the CEO is responsible. One is the company’s brand. Not in all, but in many businesses, the brand is central to the success of the business. For instance, Rolls Royce or Monsanto or Glaxo – their brands are crucial not only for their customers, but also for the investment community. A CEO has to ensure that the brand is maintained and that it is strengthened and not diluted by usage.

The second area is the spirit of the company. It should be a company that people want to work for, that they are proud of and which they can comfortably discuss with friends and family. The CEO has a significant degree of responsibility for creating a culture that establishes and nurtures that spirit.

What are the perks of being a CEO?

By and large you’re paid more than the people who work for you. That may not always be the case, but one hopes it is! And you get to meet all sorts of interesting people – that’s a perk.

And what are the responsibilities?

Responsibilities are absolute. They are never to let people down. Never to let your shareholders, your directors, your employees, down. We recently heard of an automobile manufacturer laying off thousands of people. Now I can completely understand this. You’ve got an economic environment and a downturn and these things are inevitable – but I think in some way the CEO of this company has failed. I think sacking people is a sign of failure. We’ve all done it – so we’ve all failed. But I think our responsibility to the people whom we employ is hugely important.

Is the top job the best one to have? Does it bring happiness?

No. The best job is whatever is the best job for the individual concerned. There is nothing worse than seeing someone who’s deeply unsuited to being a CEO – or unsuited to any job, really – and seeing them struggling. You see it quite often in sport: someone’s made the captain of the team, because they’re the best player – but they’re absolutely not the best captain. Not only do they not do a good job, they also are very unhappy. I won’t name names, but there are some very unhappy sporting captains around and there are some very unhappy CEOs around. So in my opinion, being CEO will only bring happiness if you’re suited to the job.

You once said, “If you set out to be a CEO, you’ll fail.” What did you mean by that?

You may not fail to become a CEO, but you’ll probably fail to be a good businessperson, because if you say that, chances are that your career ambition is taking precedence over the business you’re trying to run. And the business you’re trying to run is all that matters.

You also once said that one of your tests for aspiring and ambitious executives is to ask them if they would stab you in the back. Would you care to elaborate on that?

Mostly when you’re hiring people, you’re hiring them to do a particular job and for the skill there is in doing that job. However, there are times when you are trying to develop an all-round future CEO. They’ve got to want my job and they should be willing – if I’m the wrong person – to stab me in the back (or the front for that matter) if it’s good for the business. – Richard Charkin

Download the audio of Richard’s book from Audible or the eBook from Amazon.

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