CEO Frequently Asked Questions
CEO FAQ Why CEOs Fail?
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CEO Frequently Asked Questions SiteMap
  1. Why Do CEOs Fail?
  2. Which Techniques Should I Use?
  3. Does Benchmarking Really Help?
  4. What is Difference Between Balanced Scorecard, Performance Management, Performance Measures, and Performance Appraisal?

1. Why Do CEOs Fail?

Fortune magazine article entitled "Why Do CEOs Fail?" stated 70% of the time they can not execute their strategy. Think of Michael Dell at Dell Computer.  Everyone knows his strategy is to sell computers over the web.  However, unlike his competitors, he is successfully executing his strategy. CEOs fail to execute their strategy because:

  • they have not created alignment so everyone understands how what they do contributes to strategy of organization. 
  • they have not tied compensation those performance measures that support the strategy
  • they didn't update their strategy when environment changed. 

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2. Which Techniques Should I Use?

Like eating utensils, different techniques have different objectives. Click here, for brief explanation of different techniques. 

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3. Does Benchmarking Really Help?

Benchmarking that just compares your performance to other organizations informs you where you stand in relationship to these other organizations.  If you are a poor performer, it may motivate you to improve.  Real value of benchmarking is to find out what other organizations are doing and then adapt those techniques.  Benchmarking is like watching a great athlete. No one is best at everything.  Michael Jordan taught us that a great basketball player is not necessarily a great baseball player or great golfer. So no organization does everything the best.  Organization must concentrate on performing its core competencies the best.

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4. What is Difference Between Balanced Scorecard, Performance Management, Performance Measures, and Performance Appraisal?

These terms are defined in many different ways. It is useful to think of 4 different techniques with different objectives rather than argue about specific definitions.

  • Performance Appraisals: Focus on individual performance. Often are connected to salary increases and bonus level. Individuals and their bosses negotiate objectives and individual is evaluated against those objectives.
  • Performance Measures: Can be at cost center, function, division, group, or organization level. Are often not tied into strategy, but tied to some financial goals.  Often emphasize financial targets, but may include non-financial measures. 
  • Balanced Scorecard: focus on developing financial and non-financial measures to achieve strategy of organization.
    • Uses leading and lagging indicators
    • 4 perspectives: financial, customer, process, growth and learning measures.
    • Balances these 4 perspectives, financial/non-financial measures, leading/lagging indicators
    • Ties compensation to these measures
  • Performance Management: includes Balanced Scorecard and other techniques to achieve Balanced Scorecard measures and long term financial goals.

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