Posts from Chief executive officer

I'm a fan of 360 reviews for companies of all shapes and sizes. I was talking to the CEO of one of our portfolio companies yesterday about his company and he said "we have about 50 employees. is it time to do 360s?" I told him that he was well past the point where he should start them. He asked for some suggestions for web software to use. I gave him a couple suggestions, but I'd love to get more suggestions in the comments.

My partner Albert wrote a post last week about assessing CEO performance and I left a comment suggesting that a regular 360 review process is the best way to do that. In the case of the CEO, the review should be shared, and ideally presented, with at least a subset of the board in person.

For senior management team members, the CEO should be with the senior manager when the results of the review are presented. That gives the CEO the opportunity to discuss the findings and provide guidance, coaching, development goals, and more.

And the senior managers should do the same with the members of their team.

I've seen compaies use management coaches to run these processes and I think that is a great idea if you have a mangement coach you like to work with. A strong HR team can also do this for most companies.

I think companies as small as 10 employees can benefit from 360 reviews and I strongly recommend them to our portfolio companies. When I see a CEO or a management team resist the idea of 360 reviews, it can be a red flag to me. I like to think that everyone can and should get feedback on their performance, be open to it, and that they will certainly benefit from it.

Every once in a while I come across a blog post that so totally nails something and I am reminded why professionals blogging about their craft is such an important development in the world of media. Yesterday Ben Horowitz posted about the psychology of being CEO. He starts with this observation:

very few people talk about it, and I have never read anything on the topic. It’s like the fight club of management: The first rule of the CEO psychological meltdown is don’t talk about the psychological meltdown

Ben goes on to observe that:

building a multi-faceted human organization to compete and win in a dynamic, highly competitive market turns out to be really hard. If CEOs were graded on a curve, the mean on the test would be 22 out of a 100. This kind of mean can be psychologically challenging for a straight A student. It is particularly challenging, because nobody tells you that the mean is 22

I have never been a CEO. I don't think I would be a very good CEO. I have observed hundreds of CEOs from up close in my career from a perspective that is fairly unique and revealing. I have great empathy for the people who find themselves in this job. It is hard, lonely, and as Ben points out – it can really mess with the mind.

Ben goes on to identify a number of tools he used to help him manage the psychological challenges of the job.

If you are a CEO, work closely with CEOs, are married or in a serious relationship with a CEO, sit on Boards where a CEO is accountable to you, or if you want to be a CEO, the post is a must read.

I'd like to thank Ben for writing it and breaking "the first rule of CEO psychological meltdown."

I am posting this as a MBA Mondays post. But I did not learn this little lesson at business school. I learned it from a very experienced venture capitalist early in my post-MBA career.

I was working on a CEO search for one of our struggling portfolio comapnies. We had a bunch of them. I started in the venture capital business just as the PC hardware bubble of the early 80s was busting. Our portfolio was a mess. It was a great time to enter the business. I cleaned up messes for my first few years. I learned a lot.

Anyway back to the CEO search. One of the board members was a very experienced VC who had been in the business around 25 years by then. I asked him "what exactly does a CEO do?"

He answered without thinking:

A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.

I asked, "Is that it?"

He replied that the CEO should delegate all other tasks to his or her team.

I've thought about that advice so often over the years. I evaluate CEOs on these three metrics all the time. I've learned that great CEOs can and often will do a lot more than these three things. And that is OK.

But I have also learned that if you cannot do these three things well, you will not be a great CEO.

It is almost 25 years since I got this advice. And now I am passing it on. It has served me very well over the years.

 

I’ve written about this topic before. I think many people with the ambition and the opportunity can become excellent CEOs. But it takes a lot of work and a commitment to self improvement. It is a very hard job. It is lonely. And it requires discipline and decisiveness. Most of these traits can be learned.

But who do you learn them from? Certainly not me. I have never been a CEO and never will be. I can help entrepreneurs with many things. But there are some aspects of running a company that I can’t help with.

So I encourage most of the CEOs I work with to get mentors or coaches (or both). I have seen this work so well for so many people. You might ask “what can a coach or a mentor really help me with?”

I’ll point to a blog post by Ben Horowitz on “office politics.” I tweeted this out yesterday so some of you may have read it already. If you are a CEO or plan to be one someday, you should read it.

Here’s an example of Ben’s advice on what to do when one exec comes to you complaining about the performance of another exec:

If they are telling you something that you already know, then the big news is that you have let the situation go too far. Whatever your reasons for attempting to rehabilitate the wayward executive, you have taken too long and now your organization has turned on the executive in question. You must resolve the situation quickly. Almost always, this means firing the executive. While I’ve seen executives improve their performance and skill sets, I’ve never seen one lose the support of the organization then regain it.

On the other hand, if the complaint is new news, then you must immediately stop the conversation and make clear to the complaining executive that you in no way agree with their assessment. You do not want to cripple the other executive before you re-evaluate their performance. You do not want the complaint to become a self-fulfilling prophecy. Once you’ve shut down the conversation, you must quickly re-assess the employee in question. If you find that they are doing an excellent job, then you must figure out the complaining executive’s motivations and resolve them. Do not let an accusation of this magnitude fester. If you find that the employee is doing a poor job, there will be time to go back and get the complaining employee’s input, but you should be on a track to remove the poor performer at that point.

Imagine having someone you can pick up the phone and call when this happens to you? How nice would that be?

You can get that several ways. You can take an investment from a VC like Ben or Mark Suster or Jeff Glass or many others who have serious operating experience. Or you can bring an experienced and successful CEO (or two) onto your baord. Or you can get a CEO Coach. 

I would not recommend you overdo it. Getting advice from too many places isn’t very good. Pick a mentor/coach and run with it. If you are struggling with the demands of being the boss, the first thing to realize is you are not alone. It is a super hard job. The second thing is to get some help. From someone who has done it before and knows what to do. Trust me, you will be much happier once you do that.