Why CEOs Should Focus On Performance Management 

“Selling shovels in a gold rush” is one of those aphorisms that apply broadly, but have recently been co-opted by the innovation economy and specifically by start-ups. It usually signifies the fact that there is money to be made outside of ‘gold prospecting’, as it were, by creating and monetizing an ecosystem around tools that enable and empower. Companies that create tools across a variety of domains like data analytics, user engagement and A.I. readily embrace this analogy and the promise of gold-rush like windfalls.

What if everyone is, as the saying goes, missing the forest for the trees? The real enabler of innovation and prosperity in this era of knowledge work is human capital, and across sectors, a lack of skilled employees is seen as the primary bottleneck to growth. Consequently, for CEO’s and higher management, attracting, upskilling and retaining talent is becoming a key KPI, at par with traditional business metrics. This is driven by the realization that an organization’s ability to attract and retain a skilled workforce is a leading indicator of growth and innovation.

What then, are the different aspects that make employee performance management a core function for a CEO?

  • Culture 

Performance is highly correlated with a culture of empowerment and trust, and that starts at the top. How CEO’s set the bar with their immediate executive team reportees, is the benchmark that the rest of the organization aspires to. CEOs have a twin responsibility in this regard – they have to assess and manage their executive team reportees taking into account their individual performances, and also ensure that executives can imbibe the same values and carry it forward.


  • Communication


The ability to communicate clearly where an organization is headed and put it in the context of aspirations for growth for both teams and individuals is key to getting buy-in across the organization for the bold vision that the CEO is trying to rally everyone around. When setting objectives, this context can be the difference between engaged and empowered employees, and the just-do-enough crowd. Communication is a two-way street though, and it is equally important for an organization to remove barriers to providing feedback bottom-up. Here as well, a CEO sets the benchmark by both their individual openness to feedback and critique, as well as their ability to foster that across the organization.

  • Aspirations 

The modern workforce, especially millennials, conflate professional and personal aspirations. In other words, a workplace is now a place where they seek to write and traverse their personal narratives of growth and fulfillment. Performance management that does not address these aspects, is incomplete and potentially ineffective as well. CEO’s, especially at start-ups and small organizations need to embody this and set the benchmark for the rest of the organization. By breaking out of the straitjacket of a traditional CEO obsessed only about business metrics, and embracing a wider role that embraces employee well-being and growth, they give employees the freedom to in turn bring their complete selves and creativity to work.

  • Coaching 

Modern organizational psychology has proven conclusively that coaching and mentoring are in fact the key-differentiators that separate high performing teams from the rest. While CEO’s themselves need coaches and mentors to help them navigate the choppy waters of the modern business environment, they themselves become entrusted with the role of coach and mentor of last resort for the organization. The ability to manage high-performers in a way that can subsume individual ego’s for a greater objective plays out at all levels of the hierarchy and the CEO sets the playbook for that with the way she manages her direct reportees.

  • Vision 

Last, but not the least, a key factor responsible for attracting and retaining employees is the vision of the organization. They are willing to overlook the ebb and flow of business performance in the short term, if the bigger canvas around the organization’s vision, and the journey to get there, is laid out clearly and evokes inspiration and drive. At every individual conversation around performance management, managers need to convey this convincingly. The CEO is the one who sets the vision and the narrative around it:

    • Why is this important?
    • What meaningful change does it lead to, if we realize this vision?
    • How are we best positioned to realize this vision?

By clearly laying out these markers and revisiting them regularly, the CEO ensures that team and individual conversations around performance happen not in a vacuum, but around a larger overarching theme.


The modern CEO essentially is also some parts Chief People Officer, with employees as an equal stakeholder at par with investors, customers and other external stakeholders. While it leads to a place of empowerment and innovation, cold hard business truths are what necessitate it. If the CEO’s cannot ensure that employees are performing to the best of their abilities, and bringing aligning themselves to the organization’s narrative, the effect on the business and organization will soon become apparent. Embracing this part of their role is not a good-to-have, but a core attribute now. 


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