CEO's have to balance a tough bottom-line orientation with maintaining the morale of the team
I expect my HR head to be involved and committed to the business results as much as any other member of my team
As part of our ‘Lead Speak’ section, S. Ranganathan, Executive VP, Reliance Retail, shares his thoughts and experiences on people management and leadership with People Matters.
How will you describe ‘What is the work of a CEO’?
The work of a CEO is:
- To find the right team
- To create the correct alignment which will get the best of each member's potential
- To set the right goals that balance short-term and long-term
- To provide guidance on decisions those require the right compromise to be made
- To manage internal conflicts and aberrations before they affect work
- To sit in the lighthouse and manage shareholder, customer and public expectations.
A CEO has a role to play in the short term and long term success of an organization. How do you strike the balance between the short term results and the long term goal achievement?
I think the real goals are all long term (say 2-3 years) since that is the time frame in which processes become ingrained and the nature of the game can be altered. This is the kind of supraordinate goal that creates passion and character in any organization. However, since there is no long term success without a decent short-term result, it is necessary to manage short term results as best as possible without compromising with the goals that the team dreams of achieving. Character also means the willingness to take short-term pain at times, if that is the best way to live our values.
What is the best advice you have ever got?
“If you love your job, you will never put your name to something you can't be proud of”
Of late, we have heard about creating a ‘team of rivals’, Lincoln did it and Obama is also following this approach to build his team. Does that work in the corporate world as well? What is your view on how effective these teams can be and what are the challenges?
Conflict within the team can sometimes drive performance through competition. However, this requires the team to have the maturity and security to compete constructively. Very often, this does not work and the competition simply creates rival camps and suboptimal performance. I would use it only if the rivals have very different FUNCTIONAL competencies and have unquestioned stature within the context of their own functional expertise. More often, the rivals are not competing with each other - they are competing against a leader who has thrown them a challenge that uses all their capabilities.
Does CEO get performance feedback? Besides the achievement of numbers and figures ... Do CEO’s get feedback on improvement areas?
Boards and promoters can be very forthright / brutal in their feedback on results. Often, the problem for CEO’s is that the expectations of stakeholders are unrealistic or unclear - and this can cause some issues. On the other hand, CEO’s usually do not get enough feedback on the softer, organization-building side of their job - even from the Board, as no one else has the requisite in depth view of the organization. Of course, feedback from the team itself is very scarce for the CEO - and tends to eulogize the leader into complacency. The need for CEO’s to keep their ear to the ground and put together the "organization's view of themselves" is vital.
Are there any specific measures of operating performance that you watch more closely than others? And Why?
I tend to look at the basic short -term measures - almost entirely non-financial reports - and ensure that we are ALL seeing the same data regularly. This time-series view usually gives the best perspective for operational decision, in my view. The other set of measures I watch are the lead indicators for the business - often issues like employee-churn, customer satisfaction scores etc. While they may not cause an emergency, they need immediate action. When the avalanche is upon you, there is nowhere to run!
How does a CEO manage the tension between corporate bottomline and keeping the troops intact during turbulent times?
CEO’s have to balance a tough bottom-line orientation with maintaining the morale of the team. In my experience, this is very easy if the organization has internal transparency. The troops understand more about the nature of corporate existence than we often give them credit for. And they accept tough decisions if the CEO has their trust. It is necessary for CEO’s to lead by personal example.
How does a CEO earn the trust of an organization and engagement with the people if he has been appointed from outside?
The key to earning trust is "Integrity" - integrity of thought and action. Often, trust is confused with being liked or accepted. CEO's can be well-trusted by their teams, even if everybody in the team does not like them. Integrity is simply about "saying what you believe in and then walking the talk" - not an easy thing to do when you consider that every small word or action is under scrutiny. The second key step to acceptance is "sensitivity". Sensitivity - not tolerance. Teams expect external CEO’s to have a change agenda - and if they find sincerity and sensitivity , they accept new leaders and change.
Is it important for employees to understand the business model of the company? At what levels do you draw the line between driving innovation and following processes?
Processes bring in discipline while innovation makes the organization grow in intellectual and market capital. Basically, any activity that can have very serious ramifications and is repetitive should be flow charted and locked. This ensures that we don't risk the company. On all other issues, I would favour ownership by smaller teams within the organization. They must be able to take small risks and make small mistakes, based on which they can create their own innovation agenda. Innovation comes with responsibility for the outcome - the innovators must watch the results and take corrective action. If necessary, they must be willing to change / kill their plan and start afresh.
What are the biggest challenges you have faced in terms of people management?
Managing people is at the heart of managing businesses - and it is one enjoyable challenge. It is difficult to talk about any one aspect.
What do you expect from your HR Function?
I expect HR Head to join the Senior Management team as an equal. They must have knowledge of the business, numbers, technology etc. - it is just that their chosen area of specialization is HR. I expect my HR head to be involved and committed to the business results as much as any other member of my team. HR has KRA’s that contribute to the achievement of the team's goals and they must be chip in their bit to the company's goals.
Why are most CEO’s from Sales and Marketing backgrounds, or Operations and rarely from Finance? Why there are no CEO’s from the HR background?
I can only imagine that this has to do with their own perceptions of what they would like to do! Perhaps this is also related to the fact that in many companies HR has less "hard measurable" goals or "pressure to perform". It is necessary to dispel both notions by setting HR measurable goals and letting the entire team see how they are sharing the burden of performance. If an accountant can head the company, I don't see why an HR head can’t!