The chief executive officer of a company should see the board chairman as his mentor and the board as his or her “most unbiased sounding board”, a French expert said.
Jean Baptiste de Franssu was a speaker at a recent event organised by Misco Directors Network at Palazzo de Piro in Mdina. MDN was set up in 2012 to support individuals who wish to provide their services as directors and his lecture on directors’ responsibilities.
He explained to Times of Malta Business that a strong and positive relationship between the chairman and CEO was vital.
“Without such a relationship, it will take too long to react to problems and crises. And the link works both ways: a chief executive officer needs a strong board to offer strategic direction, as well as for advice,” he said.
“But if there is a clash over strategy, it could also force the chairman to overrule the CEO’s objections and result in a destabilising situation.”
Mr de Franssu outlined the main functions of a board: to set the strategy and ensure that the company has the right resources to attain it; to review management performance; to set values and standards, to ensure financial integrity; and, last but not least, for succession planning.
Of course, the board should not only interact with the CEO but with the whole executive team, and Mr de Franssu stressed that the two sides could not and should not work separately.
“The dynamic between them has to be positive. And both sides will benefit from exposure to each other. The executive management team and the board should meet regularly – even if not frequently. It is of utmost importance that there is mutual trust between these two sides.”
He said companies should not underestimate the importance of non-executive directors – but warned that they should take the role seriously. “They should be fully engaged. This is not the right job for someone who only intends to dedicate a few hours a month!” he said.
Mr de Franssu also commented on family businesses, noting that directors on their boards require even more skill and experience than normal.
“It is essential for family businesses to seek external perspective and wisdom. However, there is a great temptation to retain control by having a family member as chairman. It is all the more important in such cases to have non-executive directors who have enough personality to make their mark. It is not easy for them when there is family blood and there will be times when they need to tiptoe. And a successful family will not necessarily be open to the idea of being lectured to by an outsider...” he said.