How can CEOs provide guidelines without being overly controlling?
By Charles L. Baker
Ask any employee to describe the top 10 characteristics of a great job, and you're likely to hear three items near the top of the list:
Obviously, these items are related and partially overlap, since a terrific supervisor will let employees know, very specifically, what's expected of them and then give them plenty of room to be successful.
- I know what's expected of me.
- I have the freedom to do what I think is necessary to get the job done.
- I have a terrific supervisor.
Great Organizations Need Independent Thinkers
A great organization must have a terrific supervisor at the helm. The CEO supervises a variety of individuals with high levels of expertise in specific areas, and their knowledge often exceeds the CEO's. The CEO may be knowledgeable in fiscal matters but not as conversant with fund development. She may know a good deal about the services the agency provides but may not be an expert in human resources. No one individual can be an expert in every area, and the CEO will be very aware of his or her own limitations.
Managing individuals whose knowledge is greater than your own requires a great deal of trust, and to lead a good organization toward becoming a great one, the CEO must be able to build a highly effective team from diverse individuals with multiple talents and abilities. Each manager must feel free to function quite independently and creatively within her department while understanding there are definite limits to her authority.
Herein lies the dilemma. Given today's difficult economic times and the public's ever-increasing scrutiny, it's tempting to be overly cautious. The thoughtful CEO, however, knows a vibrant organization must foster diversity of opinion, an entrepreneurial spirit, and a willingness to take risks. In stressful times, the controlling, second-guessing, autocratic CEO only serves to drive away the best and brightest managers. Talented individuals are most productive in an environment that encourages a good deal of freedom.
Written Expectations Provide Freedom
To strike this critical balance, many CEOs have developed what might best be called "The CEO's Parameters." Managers retain a great deal of freedom, but there are clear boundaries that require consultation with the CEO or other team members before crossing.
Every CEO will want to develop his own parameters to fit the individual organization, and these should be discussed thoroughly with the chair of the board. A genuine secondary benefit of this discussion is the ongoing clarification of the CEO's authority and the continuing development of the relationship between these two critical leaders of the organization.
The CEO should then provide these parameters, in writing, for a full discussion by the management team. The CEO may be surprised at the team members' relief. One vice president said, "These are great. Now I know exactly when I need to check with you."
Here are some suggestions for what the CEO's Parameter's might include:
- All written, telephone, and electronic communication has prior clearance through the CEO.
- All relationships and ongoing discussions with board members must be cleared through the CEO.
- No contract or proposals will be submitted or considered without approval from the CEO. (A research and development fee of 10% should be included.)
- All fiscal issues require the approval of the chief financial officer (CFO).
- Revenue/expenses ratio cannot be exceeded without CEO/CFO approval. (Monthly expenses cannot exceed income or budgeted expense, whichever is less.)
- All programs and departments must operate with an approved budget.
- New obligations of $10,000 or more require the CEO's approval.
- All loans, including extensions to the cash flow note, must have CEO approval in advance.
- All delays in the normal accounts payable routine require notification of affected departments and prior approval of the CEO.
- The CEO approves all contract initiatives.
- External affairs initiatives are communicated to other agency components and departments.
- All staff contacts with state, regional, or county governments require involvement and approval by some member of the management team and notification of the CEO.
- All personnel activities, such as grievances, recruitment, hiring, discipline, and terminations, must receive HR consultation.
- Any change of job status for any staff at the manager's level or above requires consultation with the CEO--before any discussion with employees involved.
- All benefit program changes must have CEO approval.
- Any revision to HR policy must have CEO approval.
- New program development requires CEO approval.
- All facility acquisition and development requires consultation with the CEO.
- All aspects of fundraising/PR must receive the chief development officer's approval.
- No written/formal donor requests over $25,000 can be submitted without CEO approval.
- All representation (written, media, etc.) of the agency must receive CEO approval.
- All fund development letters must receive CEO approval.
- The CEO must approve the risk management plan and activities.
- All communication with counsel must be cleared through the CEO.
In the discussion with the management team, the CEO should focus not only on the limits, but also on the wide areas of freedom that are available. For example, although it's important to the CEO that she know about relationships between managers and board members, she isn't interested in prohibiting them, just in exercising some understandable guidance.
- Have a written agenda for your regular meeting with the CEO.
- Ensure that you do not exceed the allotted meeting time. Aim for finishing early.
- Before a pop-in meeting, check with the CEO's executive assistant for an appointment. Very brief meetings are encouraged.
- Occasionally, schedule a brief meeting just to share some good news.
- Create a list of parameters and expectations for staff who report to you.
In fund development, the CEO may not need to write fund development letters, but he may want to know what goes out over his signature. Any CEO who has ever met a donor who thanked him for his nice letter when he knows he didn't write one can certainly understand this situation.
The last point on the list encourages every manager to develop her own parameters for her team--and, practically speaking, the CEO's list will also be shared up and down within the organization. The CEO is acting as a role model to build an organization whose members have freedom within reasonable bounds.
This is a relatively simple list, and many of the items may seem to be what everyone already knows. This, of course, is the goal! The CEO wants each member of the team to know where potential trouble can arise. Real responsibility and genuine accountability grow from clear communication.
Charles L. Baker is President of Baker & Company, Louisville, Kentucky, providing support for nonprofit executives, executive coaching, and executive talent matching. Interested in sharing your own CEO parameters? Contact him at email@example.com or 502/290-4316.
The author wishes to express his warm appreciation to Miki Jordan, CEO of Para Los Niños, Los Angeles, for stimulating his initial thinking regarding the use of parameters.
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