Octavious
Hr Manager
Leolingham2000
Management Consultant
Bhagwan_07
Hr Professional
Renu Handa
Hr Professional
Maniraja
Hr Manager
Sarah68
Hr Manager
+2 Others

Dear All,
Can anyone help me about defining the role of a CEO in a production based industry?
How can the Management evaluate his performance?
what should be the criteria for his performance appraisal?
Please help me. I am stuck here.
Best,
Renu

From India, Bhopal
Dear Renu,

Hope the below information, helps you to come to a conclusion.

Thank You
Octavious

The performance of the CEO, and the relationship between the CEO and the Board, are critical factors in successful governance and fulfillment of the organization’s mission.

Tips for An Effective Process
  • Start the process with mutually understood expectations that are clearly articulated at the beginning of the evaluation period (based on job description, strategic plan, performance criteria, etc.).
  • Commit to open and honest communication.
  • Maintain strict confidentiality, because you are dealing a person’s career. Performance issues should not become public information.
  • Be sure the process positively impacts the CEO. Focus on the positive as well as areas for improvement.
  • Strike a small committee of board members to take the lead in conducting the evaluation. Nevertheless, it is important that all Board members have input into the process (e.g. through an evaluation questionnaire).
  • The committee (or the Board) and CEO should develop the process together.
  • The process should begin with the CEO submitting a self-evaluation to the committee.
  • Separate the evaluation process from salary negotiations. Keep in mind that a key purpose of the evaluation process is performance improvement.
  • Be careful before involving staff or other volunteers in the process (such as through a 360° evaluation process. If the source of feedback is expanded, it is best done in the context of an organizational review, and not just as a review of the CEO. Of course, the CEO can decide for themselves if he or she wishes to seek feedback from staff for their own personal and professional development.
  • Use benchmarks of organizational success as indicators of your CEO’s performance (and with Policy Governance, the results of the Board's monitoring activities.)
  • Take into account the CEO's personal goals and needs regarding future leadership. If you only focus on the organization's needs, then the CEO could seek to fulfill those needs elsewhere.
  • Provide a written evaluation to the CEO, but also hold an evaluation meeting with the CEO to discuss the evaluation and ensure full understanding and future expectations.
  • After the meeting, provide the full board with an oral in-camera report.
  • The final step is to evaluate the process. Make it an objective to improve the process each year.
And, of course, it is important to remember that ongoing feedback throughout the year is also essential. An annual evaluation is not sufficient!

The CEO evaluation process should encompass and inform two realms of performance – the past and the future:

1. Look back. The board collects and interprets historical data to judge, and provide a context for, the CEO’s performance. This historical review forms a basis for critical decisions about compensation or continuation in a particular role.

2. Look forward. This helps both the CEO and the board focus on the company’s future direction. Goal setting not only sets forth the strategic objectives for the start of the evaluation period, but it also can enhance the ongoing leadership development of the chief executive, with the board providing feedback on areas where personal development is needed.

These different objectives – to look back and to look forward – require separate but aligned performance management processes and tools. Unfortunately, due to time constraints, a board is more often likely to conduct these evaluations concurrently – reviewing the CEO’s previous year of performance, deciding upon compensation, setting next year’s targets, and discussing specific areas for improvement – all in a single board meeting. When the “look back” and “look forward” objectives are not clearly delineated, neither is served very well.

When time is short, boards may dispense with developmental discussions altogether, using the performance review to set the CEO’s future objectives. This approach is likely to overemphasize what results the CEO is expected to achieve (such as increased revenue) over how the CEO is expected to achieve them (driving collaboration across businesses, for example). As a result, the CEO will not have the benefit of candid, detailed performance feedback about his or her leadership competencies and personal impact or of opportunities for continued development.

Guiding principles of CEO evaluation

Each company makes different evaluation choices based on its history and culture, market, board/CEO relationship, and strategy. But whether building a new evaluation process or revising an existing one, the CEO and board need to establish guiding principles that address the following questions:
  • Why are we engaging in this evaluation? Historically, its sole purpose may have been to determine appropriate compensation, but, going forward, consider to what extent it can also be used for performance planning and development. For instance, this feedback can help the CEO align his or her future actions with the board’s performance expectations.

  • What will be measured in the evaluation? To accurately capture the depth and breadth of the CEO’s impact, the evaluation will need to go beyond the company’s bottom-line financial metrics. Other aspects of performance may be included, such as operational results, customer growth and satisfaction, people development (for example, the number of “ready now” leaders in the succession plan), and leadership competencies, such as “inspires trust through honest communication.”

  • Who will be involved in the evaluation process? If it is limited to just the CEO and the compensation committee, the process will be inadequate. It is important to seek input from the full range of stakeholders – board members, the executive team, and critical customers. Multiple sources of feedback ensure more than a narrow, top-down view by including multidimensional perspectives of CEO performance.
  • What is the evaluation instrument and how will the results be communicated? The compensation committee must decide how evaluation feedback will be collected and how summary feedback will be communicated to the CEO. For example, some organizations opt to hold an executive session to discuss the synthesized feedback and invite the CEO to a one-on-one meeting with the compensation committee chair to deliver the results.

  • What is the evaluation cycle? What are the specific steps and responsibilities? In the process of determining the timing of key steps, thought should be given to how the CEO evaluation process fits in with business planning, compensation planning, the broader executive performance management process, and other core business processes. Responsibilities, actions, and time frames should be documented and evaluated for appropriateness each year.
CEO performance dimensions and measures

CEO performance is generally evaluated along one or more of the following dimensions:
  • Bottom-line impact
  • Operational results impact
  • Leadership effectiveness
Choosing the right dimensions is the defining moment in the process, because it will form the basis for goal setting and the selection of metrics that will be used to evaluate performance. Among all the decisions to be made throughout the evaluation process, this is probably the most challenging as it raises the complex issue of the relationship between the CEO’s actions and effectiveness as a leader and corporate performance overall.

Bottom-line impact
The CEO is undoubtedly held accountable for the company’s overall financial health and effectiveness. This is often depicted in specific financial metrics, such as the following:
  • Net operating revenues
  • Net income
  • Operating cash flows
  • Earnings per share
  • Capital expenditures
Operational results impact
This category refers to the CEO’s impact on the company’s operational results and organizational effectiveness. Because these reflect the organization’s capacity to perform, they are good predictors of long-term value creation. The following are among the barometers that would be used to evaluate this dimension:
  • Customer growth and satisfaction
  • Operational excellence
  • Company image
Leadership effectiveness
Financial and operational results have historically been the main focus of CEO evaluation, but in an environment riddled with corporate scandals, leadership effectiveness measures are increasingly key components. This performance dimension refers to both metrics related to leading people as well as those things totally under the CEO’s control – his or her personal leadership behaviors.

The board, CEO, and senior management team must work together to select the right leadership effectiveness performance measures. The emphasis here is on the CEO’s actions that will help drive key organizational outcomes.

Leadership effectiveness measures should be aligned with the results and competencies critical to the organization’s success. Examples of leadership effectiveness metrics include:
  • Leadership bench strength and diversity
  • Improved retention (reduced unwanted turnover) in leadership ranks
  • Employee engagement survey results
Examples of executive leadership behaviors include:
  • Act with integrity and fairness
  • Encourage open discussion and debate
  • Create an inclusive environment
  • Recruit, coach, develop, and retain the best people
  • Foster learning, innovation, and change
  • Build strong customer, board, and other key stakeholder relationships
Checklist of CEO Performance Evaluation Essentials

Procedure
  • Explicit description of CEO evaluation process
  • Calendar with milestones and deadlines that is aligned with the business’ broader calendar and in sync with governance and management schedule
Roles & Responsibilities
  • Clear roles and responsibilities assigned to board Responsibilities members, the CEO, and HR
  • CEO involved in each stage of process with ample opportunity for input
  • Board members provide informal feedback as needed
Content
  • Clear performance standards established that reflect all relevant aspects of the CEO’s performance
  • Quantitative measures established for each performance criterion
  • If applicable, performance criteria encompass both the CEO and chairman roles


From India, Mumbai

Attached Files
File Type: pdf DEVELOPING CEO PERFORMANCE.pdf (128.3 KB, 1503 views)

Hi Octavious, Your sharing is highly appreciated. It is very useful for all HR here, thank you very much. Although I am a not a HR in India but I learnt a lot from this forum.
From Vietnam, Ho Chi Minh City
Hi Octavious sir,
I have gone through some of ur posts and all the posts are really of great use. You are helping us with ur valuable suggestions. You are really great i find myself to be lucky to get introduced to this forum as i am able to indirectly know about great people like u. Once again Thank U very much forall your efforts.
Vijaya

From India, Hyderabad
Dear Octavious,
Many thanks for your reply. It sure has made my task a lot easier. I appreciate your contribution and i hope many more like me are going to benefit from your post.
However, I have one more request. . .
can you please give me a writeup on 360 degree feedback and evaluation. It would be of great help to me.
Best,
Renu

From India, Bhopal
Dear Renu Please visit my link by name Major HR Links, you will get the entire detail over there Regrads Octavious
From India, Mumbai
Dear Renu,
You can set following job specification for the CEO of the company
a. Overseeing Productivity of the Plant or Factory on daily basis.
b. Checking Power consumption weightage in each and every unit on daily basis.
c. Wastage control
e. Overseeing to Transportation of Raw material and Finished goods
g. Budgeting of whole plant
h. Overseeing Training & Development Activities in plant. If necessary can introduce Green Belt Certification programme in the plant
i.Overseeing Safety measurement of the plant
j. Overseeing Recruitment activities of the plant with the co-ordination of HR Department
k. Overseeing Quality control of Raw material and Finished Goods.
I hope these points will give you little more idea for Job specification for CEO.
Feel Free to ask if any query
Rgds
Bhagwan Tolani
HR Manager
CM Group
Delhi
9968737796

From India, Mumbai

RENU,
here is some useful material.
regards
LEO LINGHAM
================================================
C E O
Position reports to.,
Board of Directors
Primary objective
Manage and direct the organisation to achieve optimum profitability and effective use of business assets and human resources. Develop and review policy, and plan, organise and control major functions relating to the operation and administration of the organisation through subordinate executives.
Specific accountabilities
Direct the policy and operations of the organisation for the achievement of short and long term business/policy objectives, increased profit, or market share.
Establish organisation objectives, policies and programmes and, if appropriate, set standards and targets. Analyse economic, social, technical, legal and other data or trends.
Prepare or oversee the preparation of consolidated budgets, required reports and forecasts and present them or recommend their adoption to the Board/parent company or governing bodies.
Appraise the activities of the organisation according to strategies and objectives, and monitor and evaluate performance. Consult with subordinate staff and review reconnnendations and reports.
Co-ordinate subordinate staff to optimise the use of human and material resources to achieve goals, and resolve conflicts between areas of responsibility.
Oversee the development and implementation of all organisational activities to protect the funds invested and the interests of share holders. Ensure the security and development of assets and resources.
Represent the organisation in negotiations, at conventions, seminars and official occasions, and liaise with other organisations (eg. major suppliers, customers, industry associations and government representatives).
Authorise funds to implement policies, programmes and business strategies.
Provide overall direction and management of enterprises, including personnel, technological resources and assets.
Select, or approve the selection and training of senior executives. Establish lines of control and delegate responsibilities to subordinate staff.
May undertake responsibility for some or all of accounting, sales, marketing, human resources or other specialist operations in smaller establishments.
Ensure all the organisation's activities comply with relevant Acts, legal demands and ethical standards.
================================================== ================================================== ===
CEO COMPETENCIES
Leadership Skills [ 20%] weightage
Communicates a compelling Vision and sense of core purpose, enlisting staff and others, and inspiring their allegiance to its fulfillment.
Espouses an appropriate set of core values and beliefs during both good and adverse times, and acts consistently in line with those values. Practices what he preaches.
Creates a climate conducive to an attitude of integrity, trust and professionalism, irrespective of job role, such that everybody wants to do his/her best.
Motivates staff to perceive their jobs as an avocation, much as they feel about pastimes, and to find ways for them to experience the same kinds of satisfaction.
Communicates with, motivates and coordinates the efforts of a large and influential force of member-volunteers supplemental staff, ensuring that they participate in development and effective implementation of programs that are needed and wanted by members.
Helps others to rise above self-limiting mindsets and constraints to make full use of their capabilities.
Encourages an attitude of lifelong learning to develop new skills that enable continued personal and career growth.
Builds team spirit, effectively blends people into teams when needed, and develops an appreciation for the value of the diversity that is generated by team cooperation.

Management Skills: [ 25%]
Sets standards of performance; gives feedback on performance, or lack thereof, to those standards; coaches for improved performance and development.
Oversees projects and delegated assignments to ensure they are completed on schedule and within budget, and that results meet defined expectations.
Relishes the command role, including unpopular stands as necessary, encourages debate, deals directly with adversity, and handles timely decision-making in an equitable and caring manner.
Prepares, implements, monitors and adjusts budgets to remain within approved expenditure limits.
Establishes and uses records, reports and other techniques to identify and track performance accountabilities.
Defines tasks, selects assignees, negotiates performance parameters and priorities, delegates authorities & accountabilities, supports rigorous problem-solving disciplines, and manages progress.
Attends to workplace and employment concerns and regulatory considerations, to ensure employees have a wholesome environment conducive to high performance and employment longevity.
Listens actively, speaks and writes clearly and succinctly suitable for a variety of applications and settings, and communicates to get the message across and achieve desired results.

Interpersonal Skills: [ 15%]
Relates to all kinds of people, uses diplomacy and tact, is able to diffuse tense situations, and builds rapport and constructive relationships.
Exercises patience and tolerance, and characteristically listens and tests to understand both the data and the people ramifications before acting.
Displays compassion about people’s work and non-work difficulties and is available to help; and is composed under pressure, dealing well with frustrations and not becoming defensive or aggressive.
Skilled at finding common ground to solve problems, and accurately reads conflict situations quickly and hammers out cooperative agreements with minimal disruption.
Knows personal strengths and limits and handles them appropriately, and assesses the need to modify personal behaviors to deal with changing demands and personalities.
Displays approachability and a positive and constructive sense of humor, and is able to ease tensions.

Organization & Planning Skills:[ 20%]
Marshals resources and uses them effectively and efficiently to orchestrate multiple activities and get things done.
Copes effectively and shifts gears comfortably dealing with change, maintains composure amidst uncertainty and can simultaneously manage multiple activities.
Scopes out accurately the difficulty of projects, sets objectives and goals, breaks down work into process steps, develops schedules and assignments, establishes measures and evaluates results.
Looks toward the broad perspectives of issues and challenges, can presuppose future scenarios, and thinks globally.
Sees ahead clearly, can articulate credible pictures of possibilities and likelihoods, and can create breakthrough strategies and plans.
Facilitates effectively the business processes and tasks activities of large, diverse workgroups comprised of staff and volunteers.

Results Orientation: [20%]
Focuses on customer service and is dedicated to meeting requirements and expectations of internal and external "customers".
Acts with customers in mind, gaining their trust and respect, and establishing and maintaining effective relationships.
Exudes energy, is action oriented, enjoys working diligently, and can act with a minimum of planning in the face of uncertain circumstances.
Consistently can be relied on to achieve or exceed goals and is very bottom-line oriented, steadfastly urging himself and others for results.
==================================================
CEO SKILLS AND ABILITIES

Analysis
Securing relevant information and identifying key issues and relationships; relating and comparing data from different sources; identifying cause/effect relationships.
--------------------------------------------------------------------------------------------------------------
Judgement
Committing to an action after developing alternative courses of action that are based on logical assumptions and factual information and that take resources, constraints and organisational values into consideration.
----------------------------------------------------------------------------------------------------------------
Decisiveness
Making timely decisions judgements; taking actions when appropriate; committing to position
----------------------------------------------------------------------------------------------------------------.
Technical/Professional Knowledge
Having achieved a satisfactory level of technical and professional skills/knowledge in job-related areas; keeping abreast of current developments and trends in areas of expertise.
--------------------------------------------------------------------------------------------------------------
Planning and Organising
Establishing a course of action *or sequence of activities to accomplish a specific goal; planning proper assignments of people and allocating resources; communicating expectations about tasks and deadlines; developing contingency plans focusing energy and time on priority goals, requirements and problem areas.
------------------------------------------------------------------------------------------------------------
Individual Leadership
Using appropriate interpersonal styles and methods to inspire and guide individuals towards goal achievement; modifying behaviour to accommodate tasks situations and individuals involved.
---------------------------------------------------------------------------------------------------------------------
Teamwork/Collaboration
Active participation in, and facilitation of, team effectiveness; taking actions that demonstrate consideration of the feelings and needs of others; being aware of the effect of one's behaviour on others.
-----------------------------------------------------------------------------------------------------------------
Sensitivity
Taking action that indicates a consideration for the feelings and needs of others; being aware of the impact of one's behaviour on others.
-------------------------------------------------------------------------------------------------------------
Meeting Leadership (Facilitation)
Using appropriate interpersonal styles and methods to motivate and guide a meeting toward its objectives; modifying behaviour according to tasks and individual present.
----------------------------------------------------------------------------------------------------------
Developing Organisational Talent
Developing a subordinate's skills and competencies by planning effective development activities related to current and future jobs. Considering the individual's motivation, interests, current work situation, and personal circumstances.
Sales Ability/Persuasiveness
Gaining agreement or acceptance of an idea, plan, activity, product or service by using appropriate interpersonal styles, approaches and forms of communication.
----------------------------------------------------------------------------------------------------------------
Motivation Fit
The extent to which job activities and responsibilities, the organisation's mode of operation and values, and the community in which the individual will live and work are consistent with the type of environment that provides personal satisfaction; the degree which the work itself is personally satisfying.
---------------------------------------------------------------------------------------------------------------
Work Standards
Setting high goals or standards of performance for self, subordinates, others, and the organisation; being dissatisfied with average performance; self imposing standards of excellence rather than having standards imposed by others.
---------------------------------------------------------------------------------------------------------
Customer Service Orientation
Making efforts to listen and understand customers (both internal and external); anticipating customer needs; giving high priority to customer satisfaction.
---------------------------------------------------------------------------------------------------
Initiative
Active attempts to influence events to achieve goals; self-starting rather than passive acceptance. Taking action to achieve goals beyond what is necessarily called for; originating action.
-------------------------------------------------------------------------------------------------
Negotiation
Effectively exploring alternatives and positions to reach outcomes that gain all parties'support and acceptance; compromising when appropriate.
-------------------------------------------------------------------------------------------------
Maximising Performance
Establishing performance goals, coaching performance, providing training, and evaluation performance.
--------------------------------------------------------------------------------------------
Control
Establishing procedures to monitor the results of delegations, assignments or projects taking into consideration the skills, knowledge and experience of the assigned individual and the characteristics of the assignment.
--------------------------------------------------------------------------------
Delegation
Allocating decision-making authority and task responsibilities to appropriate subordinates; utilising subordinates' time, skills and potential effectively.
Rapport Building
Creating continuing compatibility; getting along well; pro-actively developing relationships.
Tolerance for Stress
Maintaining stable performance under pressure and/or opposition (eg time pressure, job ambiguity); relieving stress in a way that is acceptable to the person, others and organisation.
----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Innovation
Generating and/or recognising imaginative, creative solutions in work related situations.
Adaptability
Maintain effectiveness in varying environments and with different tasks, responsibilities and people.
Oral Presentation
Effective expression when presenting ideas or concepts to an individual or to group, when given time for preparation (includes gestures and non-verbal communication).
------------------------------------------------------------------------------------------------------------
Resilience/Tenacity
Handling disappointment and/or rejection while maintaining effectiveness.
Impact
Creating a good impression, commanding attention and respect, showing an air of confidence.
Energy
Maintaining a high activity level and effective performance for an extended period of time.
================================================== ====================
Integrity
Maintaining social, ethical, and organisational norms in conducting internal and external business activities.
------------------------------------------------------------------------------------------------------------------------
Oral Communications
Expressing ideas effectively in individual and group situations (includes non
verbal communication); adjusting language or terminology to characteristics or
needs of the audience.
---------------------------------------------------------------------------------------------- I
Written Communication
Expressing ideas clearly in memoranda, reports, letters or other documents with appropriate organisation and structure, correct grammar and language or terminology that is adjusted to the characteristics or needs of the audience.
PRESENTATION
================================================== ========================
==================================================
Key Result Areas

"Key Result Areas" or KRAs refer to general areas of outcomes or outputs for which a role is responsible.

THE IMPORTANCE AND WEIGHTAGE OF THESE KRAs IS

-GUIDED BY THE
*VISION STATEMENT
*MISSION STATEMENT
*CORPORATE OBJECTIVES
*CORPORATE STRATEGY

AND COULD CHANGE YEAR BY YEAR AS PER THE BOARD DIRECTIVES.

THIS WOULD BE REFLECTED IN THE
-KPIs -- KEY PERFORMANCE INDICATORS
=---------------------------------------------------------
HENCE , YOU WOULD NEED TO REVIEW
*VISION STATEMENT
*MISSION STATEMENT
*CORPORATE OBJECTIVES
*CORPORATE STRATEGY
OF THE COMPANY.
ALSO YOU WILL NEED
-A COPY OF THE CEO JOB DESCRIPTIONS
-COMPETENCIES THAT IS REQUIRED FOR THAT ROLE.
================================================== =
YOU CAN MODIFY AT AS PER YOUR NEEDS.
KEY RESULT AREAS [ KRAs]
This key role will have a number of key result areas, and will include:
Manage the performance and information team budget
-ACTUAL REVENUE / BUDGET
-ACTUAL GROSS RETURNS/ BUDGET
-NET PROFIT BEFORE TAX / BUDGET
-RETURN ON INVESTMENT [ ROI ]
-RETURN ON ASSETS [ ROA]
-MARKET SHARE GAIN / LOSS

Manage information team and ensure structure/workload reflects corporate & customer needs
-ACTUAL TOTAL PRODUCTION / BUDGETED TOTAL PRODUCTION [ UNITS/ DOLLAR VALUE ]
-PRODUCTION BY PRODUCTS [ ACTUAL / BUDGETED TARGET ]

Validate information analysis provided to customers and government directorates
-ACTUAL CUSTOMER COMPLAINTS / ESTIMATED
-ACTUAL ON FACTORY SITE ACCIDENTS / ESTIMATED.

Develop and maintain effective performance reporting and monitoring framework that enables reports (covering all manner of performance-related data) to be produced for Board, Executive Team and other committees as required
-ACTUAL PRODUCTIVITY / TARGETED.
-NO. WORKERS TRAINED / PLAN
-NO. OF STAFF TRAINED / PLAN
-NO. OF MANAGERS TRAINED / PLAN
Establish and lead monthly performance monitoring group.
-ONCE A MONTH.

Generate awareness of the company
-6 ARTICLES ABOUT THE COMPANY IN LEADING MAGAZINES/ NEWSPAPERS
IN A YEAR.
-4 SPEAKING ENGAGEMENTS IN A YEAR.

Develop relations
-80% OF TARGET IN THE GOVERNMENT
-80% OF KEY TARGETS IN THE BUSINESS.

Liaise with the MANAGEMENT performance lead to inform, clarify and/or update on performance against plan
Act as lead in any performance initiatives
################################################## ##################

From India, Mumbai
Dear Leo,
That was really useful.
Thanks a ton. I am in the process of defining the CEO role and ofcourse the criteria for his performance evaluation. Once my document takes the proper shape i would put it up here for the inputs and feedback from the exerts here. In the meantime if you have any more to add then i would appreciate it.
Thanks again.
Best,
Renu

From India, Bhopal
Thanks to Renu, Leo and Octavious!
I want a clarification on the related position. What is the difference between CEO and COO. What are the differences on their role.
I am working as HR and Project Manager of Software Development Concern. I have to define the role for COO position that newly included in our concern and his documentation procedures.
Please help me in this regard and thank you for your posting related to that in advance!
KPM

From India, Madras

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