All humans make mistakes at some point — including CEOs.
However, because CEOs are often the public face of their companies and key decision-makers, their mistakes often have worse consequences than most people. One mistake can ruin a CEO’s entire company strategy and hinder the brand’s growth.
As a CEO, it’s critical to be aware of some of the common people, strategy, execution and cash missteps so you can avoid them. Here is a breakdown of eight common cash mistakes CEOs make so you can learn how scaling up can lead your company to success.
1. Not Knowing and Understanding Their Numbers
In business school, you are taught to know your numbers. Unfortunately, some CEOs don’t remember or know this lesson, so they leave everything regarding numbers to the chief financial officers (CFOs). This affects the ability of a CEO to make financial predictions or critical decisions supported by facts and data.
Every leader needs to know how they are doing with their MINs (Most Important Numbers), especially their cash position — and stay on top of those figures. When the company needs cash to keep up with growth, pay a debt, or support its operations, the leader will know what needs to be done.
2. Not Building and Using a Clear and Concise Dashboard
Too many leaders don’t understand the importance of dashboards to the success of their organizations. Others know the value of dashboards but make mistakes when planning and building them.
One common mistake is trying to fit too much information into a single dashboard. The result is often a messy dashboard that’s difficult to understand.
A dashboard should only display important data. All critical numbers showing the company’s past, present, and forecasted future should be clearly visible to everyone.
The dashboard should also include visuals like charts and graphs to serve those who don’t want to just look at numbers. This ensures everyone knows what they’ve done, what they are doing, and what is expected in the future.
3. Not Viewing and Updating the Dashboard on (At Least) a Weekly Basis
If your dashboard has old data that no one bothers viewing, it doesn’t serve any purpose. This is akin to having a solid strategic plan but not implementing it. Such a dashboard might lead to poor decisions if the old data is relied upon for decision-making.
For a dashboard to serve its purpose, the CEO and the entire leadership team should review it at least once per week. It should also be regularly updated to give a more accurate picture of where the company is and where it is going.
4. Not Breaking Down the Dashboard and Sharing the Right Numbers With the Right People
Another common mistake CEOs make is thinking the dashboard is only meant for them and the management team.
Employees who don’t understand how the company is performing and the factors contributing to stagnation or growth may not pull their weight as needed. For this reason, everyone in the company needs to know their most important leading and lagging indicators and how they impact them every day. This links activities and execution to results, creating greater engagement at all levels.
5. Not Measuring the Right Stuff
As a CEO, you can measure what time the sun comes in relation to your first coffee, but no one cares about that. The results don’t add any value to your company either.
What you need to do is focus on the most important things. For example, how is the marketing department doing? Are you hitting your targets? When you identify and measure the most important numbers, your company is in a better position for growth.
6. Not Helping Everyone Understand What They Do and How It Affects the Financial Success of the Business
Every team member, from the CEO/president to the person who sweeps the shop floor, needs to know what they do matters and affects the business, either directly or indirectly.
Unfortunately, some CEOs don’t make an effort to connect with employees, especially those in the intermediate and entry levels. As a result, these employees may not feel appreciated enough, so they only put bare minimum effort, if any.
7. Not Assigning Clear and Specific Accountabilities
When a CEO doesn’t have the right numbers assigned to the right people, results are often too subjective and difficult to measure accurately. Actions will be subjective, based on personal assessment (e.g., opinion), and/or binary (e.g., got it done or not) rather than objective.
With proper accountability, there are visible, measurable numbers that everyone can see to know whether the leaders have completed their assigned duties or not.
8. Not Using an Accountability System, Process and Tools to Ensure Leadership Accountability
The other costly mistake CEOs make is not utilizing an accountability structure, system, process, and tools. While individual leaders holding each other accountable may have worked in the past, it may not bring the results, especially if the involved leaders are too close (e.g. friends/family) and/or have other emotional attachments.
Modern leaders must move away from person-to-person accountability and embrace more of a process-to-person (and team) accountability. This may involve using software packages or consistent updating and reporting among teams, up to their leaders and down to their direct reports.
The toolset must be easily used and updated regularly, whether the numbers in question need to be updated daily, weekly, monthly, quarterly or annually. Excellent leadership teams always update their respective numbers prior to the meetings. This allows them to go into these meetings “hot”. No weekly meeting should waste valuable time looking at numbers for the first time (e.g. cold).
Learn How Scaling Up Your Business Can Help You Avoid These Costly Mistakes
The mistakes above are detrimental to your success as a CEO and your company’s growth. Thankfully, Champion PSI has a scaling-up program where you and your team can undergo intensive training and assessment on business growth. You’ll learn how to manage people, execution, strategy, and cash. When you’re done, you will know how to avoid these common mistakes CEOs make. Wondering how to get started? Schedule a free 30-minute call with an executive coach at Champion PSI today.