What Is Important to the CEO

Before exploring what we can do in supply chain and operations to help create a profitable, competitive, and valuable company, we need to identify a company s overarching purpose and what is important to CEOs. Primarily, the central purpose of a company is to increase shareholder value. Total return to shareholders (TRS) is frequently used to measure management and company performance. From a CEO s perspective, there is pressure to show returns to shareholders that either meet or exceed shareholder expectations and achieve above-average earnings compared to competitors. If they don t, share price is likely to fall due to unfavorable reviews from financial analysts. CEOs report to numerous audiences, such as  

Each audience has its own criteria for evaluating success. In addition, many other criteria and financial performance measures are reported and used to gauge company performance. Besides total return to shareholders, other common measures used to evaluate a company and its executive management team include  

Earnings before interest taxes depreciation and amortization (EBITDA) 

Gross margin, return on capital employed (ROCE) 

Why these Quite simply these measures are what are important to analysts, owners of company stock, and those who invest in or lend money to companies. If it is significant to external constituents, then it is important to the company executives. By no means is this an all-inclusive list. Several other performance measures are considered, but those listed are the most common. No single metric can tell the whole story however, a core of key performance indicators can provide insight into the financial health of a company. 

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