3 Signs the Best Move for Your Business Is to Hire Somebody Else to Run It
The fact that everybody knows the same few hugely successful founder/CEOs indicates how few founders succeed big-time as CEO of their own company.
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"Founder/CEO of Some Company" sure sounds flashy. Feels good, too, until you realize the distinction between the two jobs and the amount of work that comes with each. But even with that, you keep on telling yourself, "This is how it's supposed to be." Maybe that's why many of the high-ranking entrepreneurs have 80-plus-hour workweeks. You don't really have space in your budget for a new hire anyway, let alone a new CEO.
Then things get harder and, of course, you have someone to blame for every misfortune. According to research, it just might be you. While you're the owner of a good business, it might not reach its full potential just because you're leading the company as CEO.
A team of professors from the Harvard, Duke and Vanderbilt universities' schools of business combed through data collected by the World Management Survey and found some interesting relationship between the leader of the company (founder-CEO or CEO) and overall productivity. They found that on average, founder-led companies were 9.4 percent less productive than those led by CEOs. While the data represents more than 13,000 mid- and large-sized companies across 32 countries, it'd be interesting to know how many founder-led companies don't even get to the level of those surveyed.
Now, I'm not saying that business owners or founders always make crappy CEOs. I'm just saying the following signs could mean...well, you're a crappy CEO:
1. You're not good with operations.
A similar study was conducted by Noam Wasserman where he sought to discover the chance of a founder surrendering leadership. When Wasserman analyzed 212 American startups founded in the late '90s and early '00s, he found that only 50 percent of the founders were CEO by the time their company was three years old. This dropped to 40 percent by year four, and fewer than 25 percent of the founders still led their company by the time of its IPO.
Wasserman is quick to note, however, that founders are stubborn when it comes to letting go. His research suggests that 80 percent of the entrepreneurs "are forced to step down from the CEO's post." When the founder isn't fired by investors who keep insisting that they relinquish control, they are forced to step down because potential investors won't put their money in a company that's dependent on a single individual.
What if you didn't have investors to force you out and you were both "rich and king," as Wasserman puts it? How would you know when you can't effectively lead the day-to-day operations of your business?
Your job as CEO is to ensure deadlines are met, customer concerns are addressed and your team is inspired and motivated, at all times. Generally, it's your responsibility to ensure daily operations run seamlessly. If you're constantly frustrated over how much you have to do and can't confidently take credit for your team's motivation, then maybe you need to let someone else take over.
The way you handle this realization and transition is a make-or-break for your business. Wasserman advises that, for a smooth transition, the founder needs to be honest about their motives for getting into the business. Ultimately, the less self-serving your motives are, the easier it will be for you to let sturdier arms take the wheel.
Related: When the CEO Goes Bad, the Whole Company Needs a Fresh Look
2. You're running an overworked team.
Your role as CEO is to be constantly working and moving forward. CEOs are naturally very hardworking. Being the owner of the business is a different, equally demanding role. When brought together and fit in one person, the two roles can cause immense pressure on the individual. To stay afloat, the individual will tend to lean on their team (with other roles already assigned) for help.
While you might register results, over-working your team can lead damage your business over the long term. The most immediate effect is that your team's morale really goes down. A study published by Families and Work Institute has revealed that more than half of the employees in the U.S. have felt overworked at some point in their job. Seventy percent dream of having another job bacause they are overwhelmed or over-worked at their current job. Twenty-eight percent of the 1,003 workers surveyed said they were "often" or "very often" overworked, while 29 percent felt that "often" or "very often" they didn't have time to reflect on their work.
The study also found out that taking full vacation time had an impact on how content they were with the job. There are simple ways to know if you're overworking your team, some of which you can find here, here and here.
Related: 5 Easy Ways to Relieve Your Overworked Employees
3. You have a case of Founder's Syndrome.
Also referred to as "Founderitis," Founder's Syndrome has afflicted many founders around the globe. Basically, it's where the owner of a startup, established business or non-profit retains unchecked power over strategic decisions at their business. As the founder, you feel like you understand best what the company needs and it's OK because you really do know much. So you want to control decision-making at a point because to you only your ideas matter. At brainstorming sessions, this is how you behave:
- You shoot down ideas without justification.
- You give business solutions based on personal preferences.
- Your decisions are based on pure misjudgment, rather than data.
Before you know it, people give in and nothing is done without your approval. This, ironically, results in your getting overwhelmed and burned out.
So, "How do you harness the knowledge, creativity and passion of the founder without risking Founderitis?" you might ask.
The key is to find balance in governance. First, understand that everyone needs to be heard to help you see the issue from all angles. Second, if you have to be a founder-CEO, it helps to build a team of executives to help you run the company. Lastly, especially if your brand is built around your personal identity, you need a succession plan and have to participate fully toward its implementation.
As the business owner, you might be reluctant to surrender your power. After all, no one knows your business better than you. Five years after being ousted as Twitter CEO, co-founder Jack Dorsey was returned as "new" CEO in 2015 because he "knows more about Twitter than anyone else." Similar case with Steve Jobs, and if you look around you'll probably find more examples. Or maybe you're heading a family business where having a familiar face at the top helps bring values like trust and loyalty. So your hunches and ideas may be in the right direction.
However, if you suspect you're taking on more than you can handle, the most logical thing to do is seek help.