Thursday 11 August 2022

Why do we need chief executives?

Manama, November 17, 2013

By Hilmy Cader

Even in the toughest of restructuring in the face of the global financial crisis, one position that escapes the 'chop' is the job of a chief executive, although the person holding the job is likely to be replaced every three to four years!

But, should the job of a CEO be that sacred? Do we really need a CEO? Even if we do, is it a full time job? What does a CEO do justifying his/her existence? Do we put this job through the same rigour of justification as we do for other management jobs or do we assume it is a 'Holy Black Box'?

Tough times call for tough measures and you cannot leave any item of cost unchallenged in these challenging times, certainly not the highest cost element on your payroll (we assume!), says Hilmy Cader, in an article in the Gulf Daily News, our sister newspaper.

When asked the question "why do you need a CEO?", you tend to get a queer look and with some degree of stammer, the common answers that come out are:

How can you have an organisation without a CEO?

We have always had a CEO and we will always have one!

Someone needs to lead this organisation.

Whom will all the vice-presidents report to?

Who will hold this together?

Who will give directions and make things happen?

Some even rather cynically, say "you must be nuts!"

Some of the responses are flimsy while others do not justify a full-time role for a CEO.

On a recent consulting assignment with a regional financial services institution, we had to work with a board of directors to define the role of a CEO - on a ground-zero basis, with very clear key performance indicators (KPIs) that measure the CEO's effectiveness.

In defining this KPIs, one pitfall to avoid is CEOs basking in the glory of net profits, in addition to which measure in which parts of the business has the CEO made a tangible, bottom-line impacting role.

Boards are strongly recommended to engage with CEOs for such a process and not just be content with the dividend payout and the market cap only.

(Hilmy Cader is the chief executive of MTI Consulting. The views expressed are his own).

Tags: Financial crisis | Chief Executive Officer |

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