Value of a CEO extends far beyond the title

An entrepreneur may come in all shapes and sizes with all different capabilities in starting and operating a business. Some are best at innovating, some at sales and some at operations. Seldom are all of these talents found in one person – thus the benefit of creating a team.

A successful business requires leadership – a person who serves as the chief executive. Simply holding the title does not make it real. Many people intentionally or unintentionally assumed the position of CEO with all of the additional responsibilities that it represents.

Many experts and publications tout the advantages of moving away from an authority structure that is hierarchical – top down – where orders are handed out as mandates without input or participation by members of the team, support staff or even the owners or the board. In this culture, the role of the CEO is diminished with authority spread throughout the organization.

However, regardless of the authority structure and the culture of the organization, someone has to serve as the human interface between the organization and the world. This always includes the CEO. The CEO is not only a critical line of communication but also an icon for assigning credibility to the organization. Any time anyone outside the organization makes a decision whether to work with the organization or to work with someone else, the credibility of the organization as reflected by the CEO is called into question.

I have worked with hundreds of CEOs. Some of these were simply representing themselves as a sole proprietor, and some were representing thousands of employees as small to large businesses.  Too often, these individuals reflected some aspect of their character that reflected badly on their organization. This led to a lost deal, lost funding, failure to recruit a new member to the team or some other important outcome.

In too many cases, the CEOs simply were not present. They were putting out fires, engaging in an activity for which they were poorly qualified or not qualified at all, or doing work that could be and should have been delegated to someone else.

This issue presented itself recently in a discussion with a CEO and the amount of time he had expended in raising capital in 2015. This particular CEO had spent more than 500 hours talking with prospective investors and making pitches. This significant portion of this individual’s time was not spent talking to vendors, resellers, advisers, the team or anyone else.

The question was raised as to the value of the CEO’s time. Different perspectives were offered.  The amount he was being paid (very little), his market rate if he was working for a mature business, the cost of hiring someone else to perform any of the work that might have been delegated, the impact on the price of the money that was raised or the lost opportunity to make sales or form any other relationship that advances the mission of the organization. All of these perspectives were offered to either justify the amount of time spent in raising capital or to support a new capital-raising strategy.

Although no agreement was reached over what activity should have been the priority for the CEO, it was agreed that the CEO only had a limited amount of time and could not do everything.  So, if for no other reason than the novelty of the title held by this individual, the value of the CEO is priceless.

Because of this value, CEOs should treat all of their time as an investment in their organization and should consider the rate of return on their time in picking and choosing among all of the activities for which they are responsible.

Contact Karl Dakin of Dakin Capital Services LLC at 720-296-0372 or kdakin@dakincapital.com.

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