Written by Joseph F.X. Zahra, 29 May 2013
Organisations are like human beings. They thrive on relationships between persons that keep equilibrium, balance and harmony. Of course this does not mean that there is no tension or differences in opinions, ideas and styles. It means that these differences and tensions are managed for the good of the organisation. One such relationships – and in more than one respect, a critical relationship – is that between the board of directors and the Chief Executive Officer (CEO). The state of health of this relationship has a direct influence on the performance of the organisation. In more direct words, it can either make it or break it.
I am listing here a number of “essentials” in this relationship. It can be used as a check-list for your board to test the strength of this relationship.
Is there a common understanding between the different roles and responsibilities of the board of directors and the executive, particularly the role and responsibility of the CEO?
Are you fully aware of the perils of a strong board of directors and a weak CEO, and vice-versa?
Do you have good governance procedures at board level, and are you happy with the information and communication flow with the executive through your CEO?
How much has your board participated in the selection of the CEO? How professionally managed and objectively led was this choice?
Is there an excessive influence on the part of the CEO on the board? Can the person manage his/her gravitas and persona?
Is the CEOs personality too strong and domineering? Is it intimidating? Has he/she been there too long? Can the CEO be stifling the board of directors’ vision of the organisation’s future?
Is enough homework being made by the board members in preparation for board meetings? Are they questioning enough? Are they getting the information they need that helps them to discuss intelligently and decide? Are papers being circulated well ahead of the board meetings to give them ample time to read and study?
Are directors constructively challenging the strategy prepared by the executives and presented by the CEO?
Has the board thought about succession for the CEO? Is it being held hostage to the incumbent? Is there a succession policy which is accepted by the board and the executive?
I could add a few more points to this check-list, and I will leave up to the reader to think about more questions in this test. It is ultimately a question of building and maintaining Trust between the board and the CEO. If the board feels that this is waning... check and re-check again (and re-check again)... and if it is still marking deterioration, than it is time to get a new CEO.