Three Responsibilities of a CEO: Culture, Growth, and Profit

Three Responsibilities of a CEO: Culture, Growth, and Profit

About six months ago, I was invited to a local Harvard Alumni luncheon. The speaker was Barclay E. Berdan, CEO of Texas Health Resources, the largest healthcare organization in North Texas. Texas Health Resources employs over 26,000 people at 29 hospitals and 350 outpatient facilities.

After Berdan finished his remarks, I asked him, “What are the key elements you focus on as a CEO to keep things moving forward, yet not lose yourself in the weeds?” It was both refreshing and surprising that he immediately started by talking about how CEO’s must be responsible for the culture. He went on to explain how he intuitively leads. I was hoping he might list three to four areas he focuses on, but did he not.

The reason I asked Berdan, and the reason I have taken an internal dive myself to answer that question, is because I am in a season of my leadership in which most of my work is in direct contact with the CEOs of the organizations I am a part of. As Chairman of the Board of a non-profit ministry, I advise and oversee a CEO. As a member of two other boards, I assist with CEO oversight and support. As a business owner, I work closely with our CEO. As a recent investor in another business, I have a direct interest in how the owner leads. (For clarification, I am using the term CEO as the person who oversees the whole organization, not necessarily one who has that title or is the Chief Executive Officer of a public company.)

I have desired to create a model to help me and the CEOs I work with have a simple reference to define their ultimate responsibilities, and against which they can measure their success, focus their thinking, gauge their personal development, and evaluate their work.

I have finally come to the answer, and I want to share it with you in this article. I believe that everything executive leaders do can be tucked under one of these three categories: culture, growth, or profit. If you are the top person in your organization, and your organization is succeeding in these areas, kudos to you. In my book, you have succeeded! If you find your organization is lacking in any of these areas, I invite you to question why and challenge yourself to create a strategy to generate success in that area.

Culture

To maintain a thriving culture, a CEO must get so many things right. We must start with successful human capital: hire the right people, on-board them, train them, place them, and lead them well. Moreover, for the culture to thrive, we must have a strong mission, vision, and values that we continually and creatively talk about and get everyone engaged in walking out.

I was recently introduced to an Emergency Room company that is really quite impressive. What they are doing is cutting edge in their approach to patient care and team building. One example, they have a massage therapist on call who is available to both staff and patients.

As I talked to one of their business leaders, he said, “The culture in our organization is such that we are not afraid to learn from our competitors and try new things.” I talked to about ten different people in front line positions or high-ups in different locations and at different times, they all gave me the same message and seemed happy to be there.

Organizations that have such a positive culture do so because of the CEO. The people in charge are intentional to design and chart a course of how the culture should feel, and they carefully shepherd their people in that culture. In the example above, Mr. Berdan was a great example to me of putting culture at the center of a CEO’s top responsibilities. Even though he leads a very large and highly successful company, culture was the first area he talked about when I asked about what he stays focused on.

What is the culture of the organization you lead? If you are at the head of your organization, you must take ownership and responsibility for your culture. Succeeding in this area is not an option if you want to be a successful CEO.

Growth

There are two types of growth: breadth and depth. For example, you can grow in size in the form of more store fronts, more members, or more clients. Likewise, you can grow in terms of improvement, such as advancing your systems, becoming more efficient, or offering higher levels of customer service.  Also, also we must distinguish and desire healthy growth, not undisciplined growth that ultimately leads to a hard crash.

Some might argue that growth in size should not always be the goal. I agree that sometimes there must be a time of fixing and sustaining what has already been built. However, if the CEO does not have a long term strategy for growing the organization in size, it makes all stakeholders, from front line employees to shareholders in public companies to governing boards, unexcited and ultimately unhappy.  Even Jesus in the parable of the talents, taught that we be good stewards of what is entrusted to us and grow it. Therefore, I think it is a must for CEO’s to grow their organizations.

If a CEO is determined to expand an organization, what elements must he or she succeed in? Everything. Culture, vision, strategy, goals, leadership, human capital, execution, branding, navigating industry trends, and managing risks. Therefore, when an organization experiences healthy, profitable growth, the top leadership should receive credit for leading well in all areas.

Sometimes, an organization has to shrink before it can grow, meaning there may be excesses and fluff that has to be trimmed. Even then, the CEO’s ultimate goal should be growth: healthy, but aggressive growth.  If a CEO cannot ultimately produce growth, I believe they should resign. As students of leadership, you and I must ask the hard question when it comes to growth: “Have I been able to grow the organization I lead?” If the answer is no, then ask the harder question: “Am I the right person to lead this organization?”

Profit

This area is easier to measure, and I believe it is the responsibility of the CEO to produce profits for the investors and stakeholders. It is easy to run a company without producing profits, making just enough to get by. But left unchecked, it is not only dangerous, it’s irresponsible. Elon Musk is famously willing to reinvests all the profits in his companies and is not focused on immediate net profits. However, Elon’s responsibility to the shareholders of his publicly traded companies is to have highly valued and ultimately very profitable companies. Maybe that’s why he is worth north of 30 billion dollars.

Whether you are in a for-profit or not-for-profit organization, the CEO must preside over healthy finances. What is the financial picture of your organization?

I encourage you to think about these three areas if you are a CEO, or if you oversee or coach a CEO. Culture, growth, and profit are essential to the health and very existence of every organization. They are the ultimate the responsibility of the CEO.

 

Your Friend,
Wes Saade MD Signature

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