I managed NetQoS, a network performance solution provider, through 31 consecutive quarters of double-digit growth, but that winning streak was bookended by the post-9/11 recession and the 2008 Great Recession. Things were incredibly tough in both recessions and were a test of my credibility and competence.
We reexamined our mission, vision and values to make sure we hadn’t missed responding to a fundamental change in the market. I told employees that while I couldn’t promise that we would never have a downturn and have to lay people off, I could promise that I would be honest with them about our results and how the business was performing. When we did have to do a small layoff, no one was shocked because we had consistently communicated the struggles in the business and the need to cut expenses.
Transparency is key to credibility and to inspiring people to push forward.
One of the ways you maintain balance in your approach as CEO is to use a set of consistent measurements to communicate to employees and the board how the company is performing. “Cheerleader CEOs” tend to change the metrics at each board meeting to focus on whatever positive news they can find. If they can’t find a positive metric, they just talk about the big deal that is going to jump-start everything.
Using a consistent set of metrics that are tracked over time to judge progress will discipline the Cheerleader CEO and all the employees to pay attention to what is important, regardless of whether the company is doing great or hitting a rough patch. Revenue, cash flow, growth rate, margin and other metrics that track progress on the business fundamentals must be constantly reviewed to create an objective view of the company.
So how do you maintain your credibility with employees while maintaining good morale and effective communication within the organization? Transparency is key. A CEO should ask themselves the following questions to find their personal balance:
- Consider the last time your company went through a rough patch. How did you communicate with your team about it? What did you do to support and encourage them?
- When a team achieves a big win or when the company is doing well, how do you maintain their focus on continually improving?
- What information do you share every month and quarter with your employees and your board? How does that information align with your mission and vision?
The well-balanced CEO is a paranoid optimist, focusing on reality and adjusting his attitude to counterbalance the natural ups and downs in a business. When you can do this successfully, you’ll keep your teams focused on the vision and mission and what they need to do to keep the company moving forward.