CEO Approval of the Performance Measurement System

Top executives set the behavioral tone of an organization. These leaders, particularly the Chief Executive Officer (CEO), are not only responsible for establishing the organization’s vision, mission, values, and goals, but through their decisions, actions, and communications convey to the workforce their commitment to the achievement of these expectations. Such conveyance demands that these expectations also be programmatic embedded within the organization’s policies, procedures, standards, and performance measures. Therefore, it is crucial that the executive team approves, buys-in to, and reinforces the organizational performance measurement system so to ensure its credibility with the workforce at large.[wcm_restrict plans=”41632, 25542, 25653″]

Organizational performance measurement systems quantify and reinforce achievement of the organization’s mission goals in a manner consistent with its values. These systems cascade vertically through and are shared horizontally across the organization so to align each manager’s decisions and employee’s actions to the optimal achievement of the organization’s purpose. When members of the leadership team fail to buy-in to one or more of the performance indicators, they tend to not reinforce achievement of the measure’s reflected results thereby creating an instance of breakdown in the organization’s overall performance. Because this negative impact can be imparted by any member of the executive or management teams, it’s important that buy-in be gained and reinforcement applied at all levels of the organization; leading to the natural conclusion that the CEO him or herself should approve the performance measurement system and be willing to reinforce that system and the performance it drives with each subordinate executive.

When the CEO Does Not Approve

CEOs can be expected to deny approval of specific performance measures. In this author’s experience, executives, managers, and employees consequently do not deliver on the organization’s stated values or goals in these areas. For example, CEOs resisting measurement of one or more aspect of a diverse and inclusive workplace environment tend to lead organizations that fail to achieve a best practice state of inclusiveness in the areas not monitored. (See StrategyDriven topic Organizational Accountability.)

CEO-level Performance Measures

The Board of Directors should approve performance measures applicable to the CEO. This normally occurs during the business planning and/or CEO evaluation processes.

Final Thought…

The CEO approval best practice should be applied to the initial implementation of a performance measurement system or its subsequent major overhaul. It is not intended that the CEO be required to approve every individual performance indicator change. Rather, individual changes should be approved by either the executive or manager one level above the individual accountable for the metric (See StrategyDriven article, Organizational Performance Measures Best Practice – Map Performance Measure Ownership) with the CEO being informed for those metric changes at the business unit or division level and higher.[/wcm_restrict][wcm_nonmember plans=”41632, 25542, 25653″]

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Additional Information

Additional information on driving organizational alignment and accountability through performance metrics can be found in:

Articles

StrategyDriven Podcasts

StrategyDriven Podcast – Video Edition

Framework for Aligning an Organization

Whitepaper

StrategyDriven Organizational Performance Measures whitepaper – Alignment

Model

StrategyDriven General Business Model – Strategic Organizational Alignment

About the Author

Nathan Ives is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.