Considering the metalcasting CEO.

While it is certainly true that the role of a metalcasting firm's chief executive officer is multifaceted, a number of all-important aspects of the job have been on my mind and in my work lately. This has spurred me to consider, yet again in this column, the role of the metalcasting CEO. Please consider the following:

Metalcasting Firms Need a CEO

This may seem self-evident to most, but I was reminded recently that some in our industry continue to buy into the notion that management teams can effectively manage themselves. In my experience, such management theories work only in theory, and never in practice. Hence my belief that one individual with sole P&L responsibility and active daily involvement is required for a business to perform to its full potential.

This is so for all kinds of reasons, but one of the most compelling is a simple, immutable fact of human nature--virtually all employees need strong leadership to be effective at their jobs. So, just as children need parents to develop properly and students need teachers to reach their full potential, employees need the constant presence of a strong leader in order to think beyond their parochial interests, interact across functional specialties, and work together with many others for the success of something bigger than themselves as individuals. This integrative function only can be provided by an effective CEO.

There Is No Truth in Business

A wise man once told me that in a complex situation, any course of action can seem like the right one. Businesses are confronted with complex challenges every day--most face several each day--and almost every member of almost every metalcasting management team has his or her own unique perspective on the right way to proceed. So, where is the truth in all of this diversity of opinion? Who decides which is the right way to go? And how does a company ensure that everyone "gets it" and acts accordingly?

The truth for each business lies in the ability of its CEO to assimilate data and perspectives from multiple sources, interpret these aspects in light of company strategy, discern the best way to reach the business' goals, and ensure unity of purpose among the disparate members of the management team. This is not an arm's length tie-breaking function, but an intensely hands-on integrative one. Thus, without a capable CEO, there is no truth in business, and business performance can suffer greatly as a result.

CEOs Must Have a "Business" Perspective

Selling castings and operating the facility that produces those castings are nothing more than means to an end, and it is that "end"--superior business performance--that must be the CEO's primary focus and daily preoccupation. In fact, it is the ability to understand, internalize, and effectively act on that perspective that is the defining characteristic of the best CEOs. Having a business perspective means, among many other things, that the CEO should focus on:

* profitability rather than sales or production;

* dollars more so than tons;

* margins as opposed to volume;

* shipments more so than production;

* coaching and people building as opposed to hiring and firing;

* cost as opposed to price;

* compatible customers, not more sales;

* compatible castings, not more production;

* return on investment rather than payback;

* limiting capacity rather than continually upgrading and expanding.

It's unfortunate but true that our industry has long ignored this prescription for superior business performance and CEO success. As a result, metalcasting has traditionally been S comprised of many lackluster performers, and many owners of these firms have come to believe that minimal profitability (less than 5%) constitutes successful performance and that superior profitability (more than 15% EBIT) is unattainable. For example, the facts that TDC Consulting Inc.'s most astute clients live with every day clearly indicate that both facets of this "success myth" are equally false.

one part of the answer is for owners to correctly define the CEO's job as an enterprise management position rather than a souped-up metalcasting management position and to fill the job with individuals that are qualified for it (i.e., have the training and experience needed to develop that business perspective). Another part of the answer is to procure tools and training for those already in the CEO's chair. Mentoring is a particularly effective CEO training tool. In this way, today's CEOs can grow to fit the requirements of the position, rather than perpetuate a downsized version of the job, which fits the limited capabilities and parochial preferences of an underqualified incumbent. If it's true (and it is) that any one employee can bring a company down, it's also true that only one person can turn a lackluster metalcasting firm, or even a troubled one, into a star performer. And that person is an effective CEO.