6 things C-level executives overlook that expose companies to needless risk

On a daily basis, CXOs deal with myriad pressures and deadlines. But that doesn't mean they should get a pass on these common oversights that affect the company's success in the longer term.


Successful CXOs know their revenue streams, their financials, and their production output, but inevitably, some initiatives fall by the wayside. Here are six common areas of CXO neglect that needlessly expose companies to risk and loss.

1: Disaster recovery

Rising uncertainties in economics, politics, and climate all indicate that disaster recovery and business continuity should be a company-wide concern, yet a surprising majority of CXOs (outside of the CIO) never think about it. Many of them regard this as the sole responsibility of IT.

"The C-level executives I speak to in even the large Fortune 500 companies tell me that they don't factor in risk," said Dr. Jeffrey Karrenbauer, President and CEO of INSIGHT, a consulting firm that focuses on solving difficult business problems. "They tell me that if disaster strikes, they'll just get together and figure out what to do -- and they don't really believe that anything will ever happen. I've been on a crusade about disaster recovery for over a decade -- but companies still don't look at it."

2: Internal talent development

Companies commit effort into recruiting top talent, but fall down when it comes to developing internal talent; this is usually due to large workloads and budget constraints.

Companies that have proactive training and employee development programs strategically position themselves to develop and retain the best talent for their businesses -- and they don't take their internal employees for granted. Their employees pay back on the investment by staying with the company.

3: Succession plans

The loss of a key manager or contributor to a business can be a major disaster, and yet CXOs and middle managers dislike succession and mentoring plans usually because there have an underlying fear that they are grooming their replacements, and that they will be replaced.

4: The real costs of doing business

CXOs can become the victims of their own balance and profit and loss sheets. The items that are on these reports are the ones most highly scrutinized because they are what analysts, stockholders, stakeholders, and the board review.

Less tangible causes of profit margin bleeds and revenue loss (such as a major supplier of a critical product component failing) are often overlooked; instead, companies have a tendency to make cost-based decisions that look great on paper such as choosing one source vendor that offers the best price for a particular product component. But if something goes wrong with this vendor and there are no backups, or if holiday demand requires that more than one vendor be put into action -- the company is left holding the bag with its customers, with backorders on items, and with customer dissatisfaction and revenue loss.

5: The long-term plan

US corporate executives are judged by the company's quarterly performance. In some industries, such as semiconductors, this focus can be destructive in the long term, because executives are doing everything they can to look good for the present quarter, and are not incented to think about the longer term future of the company.

Some companies understand the importance at times of accepting short-term losses for longer-term gains. A 25-year business plan is not uncommon in Japan, and there is at least one major US manufacturer that uses a 25-year plan. By juxtaposing short-term plans and results against a longer-term outlook, companies achieve a better balance of short and long term expectations.

6: 360-degree customer satisfaction

CXOs tend to look at customer satisfaction in terms of sales, but customer service departments continue to be second-class citizens in many organizations. All you have to do to see this as a consumer is to measure the difference between ordering something online or over the phone against how long it takes when you require follow-up service.

Companies that focus on 360-degree service for their customers position themselves for competitive advantage in the market, because customers want to be taken care of, and they are willing to pay more if they can get that attention.

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By Mary Shacklett

Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...