Each of my customers has a story that everyone can learn from. Several years ago, I was contracted to help a company that lost its founder, CEO and corporate leader, after which the company fell into the hands of the CEO’s son, who was in his mid-30s.
His father prepared him well but not to the point of immediate succession. The good news is the son is a total package — mature beyond his age, a motivated student — but he’ll need to be stretched and coached for several years as he moves himself and the team to a higher level.
We coached the son to immediately take the lead with defensive moves to reassure key relationships with valued customers; the bonding company, the bank, suppliers and company associates. We then focused on the field and management team and his new role as the leader and CEO. He understood everyone would be looking to his performance, leadership and reassurance in taking the company forward.
After stabilizing the ship, he analyzed his present team — his goal, to borrow the words of Jim Collins in his article, “Good to Great,” was to “Get the right players on the bus in the right seats.” He found some key associates were in the wrong seats, expanded the roles of certain players and made a strategic new hire. I was impressed with his analysis, especially the reading of his team members and their skills.
After a coaching session, I wanted to leave him with a single thought to move him forward and help him visualize the big picture of his new role as CEO. My intention was to begin planning for the changes that would move him into the role of strategic leader. I got this idea from Robert Slee, author of Midas Managers.
I instructed him to tape a note reading “$200” on his monitor to help him focus on his everyday responsibility as a CEO. If you work a 40-hour week with a two-week vacation, you would be paid $400,000 annually.
In his second year, the sign should be changed to read “$300.” And in year three it should say “$400.”
Why did I ask him to do this? Because these are the minimum hourly wages for which he should work. His new role as leader/CEO is to create value and focus on the big picture of the company.
Underperforming CEOs spend almost all their time focused on the work that should be performed by their managers and support team who are often paid less than $50 per hour. I wanted him thinking of working ‘on’ the business instead of ‘in’ the business (Michael Gerber, The E Myth). Even if an owner works 3,000 hours per year at this rate, he or she would only earn $150,000 (at most).
The challenge is to leverage your time through leadership, process, vision, performance, training and accountability. Fifty dollars an hour doing everyone else’s work isn’t the path to financial independence or a great company.
Consider what’s involved in a CEO’s role that pays more than $200 per hour:
- Leading the creation of systems and manuals that eliminate error, increasing safety, and improving quality, efficiency and profitability;
- Building the company vision by leading, teaching, coaching, mentoring, stretching and holding everyone accountable;
- Listening, reporting, measuring, building consensus and communicating in management team meetings;
- Creating a vision and strategic plan that every associate understands;
- Setting the standard, leading by example, and recognizing and rewarding those who excel;
- Strategically choosing the right niches and most profitable markets;
- Being at the helm and keeping an eye on the horizon;
- Getting the right people on the bus in the right seats for each niche;
- Implementing systems, measurements and appropriate performance metrics;
- Funding those niches that provide higher margins and growth.
You can see that the more-than-$200-per-hour activities are all strategic and cannot be outsourced. Also notice that these activities require “right brain thinking” (creative, intuitive) as well as “left brain thinking” (analytical, structural); this concept can be better understood by reading the best-seller A Whole New Mind by Daniel Pink.
Compare this with how most owners spend their days performing $50-per-hour (or less) activities:
- Creating estimates or quotes that should only be reviewed by the CEO;
- Putting out fires caused by not following written procedures and unclear directions;
- Following up with things that should be done correctly the first time, every time;
- Meeting with vendors, not strategic partners;
- Talking on the phone or meeting about stuff that doesn’t matter;
- Dealing with various logistical issues that aren’t part of the strategic plan;
- Doing other people’s jobs because they’re not trained properly.
Do you see yourself here? These are tactical activities that should be delegated to people who earn less than $50 per hour.
How many hours each week would you need to work if you focused on the $200-per-hour activities? The answer is five to 10 hours per week. This is highly counterintuitive to most people who’ve been brainwashed into believing that working 60 to 80 hours each week is a virtue.
You’ll never become financially independent or grow your company by routinely working such long hours. Sure, you’ll have to work some long hours while setting up the value-creation system. But that shouldn’t take more than three years.
My future coaching and training process focused on these big-picture, high-value activities:
- Teamwork activities moving employees toward understanding themselves, their blind spots and their teammates;
- Strategic planning and vision for one to five to 10 years for management, operations and marketing;
- Championship management skills and leadership development;
- Creating systems and manuals for accounting, operations, marketing, safety and estimating to leverage quality and efficiency.
The owner is now in his 40s and has taken the company to a level that even exceeded my expectations in revenue, profitability and culture. I was blessed to be coaching him during this critical period after his father’s departure.
In closing, ask yourself three questions:
- How many hours each week do you spend on $200+-per-hour activities?
- What can you do to get out of your $50-per-hour groove?
- How prepared is your company if the CEO were to vanish tomorrow?
Remember, the end game in order to cash out and retire is that… you need to replace yourself.