The One Question Every CEO Needs to Answer

It can be lonely at the top, especially for CEOs. Most CEOs have no way to systematically gather the right information from all levels of the business. While they may be drowning in data, it is almost always historical in nature and provides little help in answering the key question of How likely is my company to meet its corporate goals?

It seems like such a simple question, but for many CEOs it is very difficult to answer, especially as companies grow. Once a company reaches about 25 employees, CEOs no longer have a direct influence on the day-to-day work and priorities of every employee. Without a clear vision and an effective system of two-way communication, CEOs are steering a ship without any timely feedback. They are unable to guide employees in the right direction or in turn, receive the information from employees that they need to make course corrections. The information that CEOs do receive is often tactical, outdated and/or simply irrelevant to the future of the business.

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Employees who see no direct tie between the corporate goals and their work will still perform tasks, but their guiding principles may lead them astray. They will make decisions based upon the priorities of their manager, their department or themselves, which may or may not line up with the CEO’s priorities. With no understanding of the company’s overall goals, employees may blindly follow company policy without regard to how it impacts customers or the business. Then, they will report on individual or departmental metrics that don’t help the CEO determine how well the company is tracking towards the future.

In addition, unfortunately in some companies the only guiding factor that drives decision-making is the static budget that was created six or nine months ago. This tyranny of the annual budget makes it difficult to adapt to changing business conditions, since the information is often woefully out of date when decisions are being made. If the only goal the CEO has communicated is to stick to the budget, then that may be achieved, but at the expense of business opportunities that could lead to growth.

Outdated information also prevents CEOs from understanding if the company is meeting its goals. Sometimes a CEO discovers an issue only to find out that a lower-level employee knew about it six weeks ago. Without an effective process to consistently gather information from throughout the organization, surprises become the norm. By the time the problem hits his or her desk, it’s often too late to do anything about it.

The answer is to have a clear vision and a set of corporate goals that the CEO owns and manages every quarter. Unlike yearly goals (that are often driven by HR), quarterly goals enable the CEO to drive company priorities, adapt to changing business conditions, and engage employees. CEOs should ensure that every employee understands the goals and how his or her daily job contributes to them. Weekly two-way feedback mechanisms will help continually align employees to the goals and give them a chance to report on any issues. The CEO should be able to see status updates on every corporate goal, with alerts to issues as they arise.

Translating strategy and priorities to the individual employees will help knowledge workers be more productive and engaged. Engaged employees who understand how their jobs support the corporate goals will in turn communicate timely, relevant information about how they are actively contributing to the company’s success. CEOs with a system to collect and analyze this information will have more influence in the organization, with fewer surprises and the ability to act on issues before it’s too late. They’ll have an informed answer to the question that keeps them up at night: How likely is my company to meet its corporate goals?” 

I am the CEO of Khorus, a business management software system for CEOs; author of "The CEO Tightrope"; co-founder and managing partner of private equity firm Lone Rock T...