Shared Commitment to the Company’s Success
February 4, 2019
Risk and Reward Often Arrive Simultaneously for Nonprofit Boards
October 5, 2019
The role of the board is to set the strategy for the company. The role of the CEO and his or her management team is to execute on that strategy. When boards operate effectively, they provide governance and oversight and do not dictate how management should run the company. Boards of large, publicly run companies are typically high functioning. The directors have a wealth of executive experience, typically with considerable director experience and formal board education.
In small, private, or family-run enterprises, directors may not have as much experience and may cross from governance to operations on occasion. As well, for family-run businesses it can be difficult to separate relationships and family loyalties from what is in the best interest of the company, particularly when faced with difficult decisions. This can be more difficult for the CEO and the management team than a more unbiased board.
As a director, you can have considerable influence. Encourage your director colleagues to participate in director education and/or propose recruiting more experienced directors. If you are a CEO in this situation, address the situation respectfully with the board chair or the chair of the governance and nominating committee. Provide evidence of the impacts resulting from the board stepping into operations or family dynamics. In most cases, directors will be receptive to feedback if approached in a constructive and collaborative manner.
The board’s primary responsibility is CEO succession. To that end, ensure that the members of your management team engage with the board with some frequency. These interactions will develop management’s communication skills and further their confidence in dealing with directors. Some of the directors may provide excellent guidance to managers, usually drawing on their areas of expertise such as technology, marketing, finance, M&A, and so on.null
The chair may be the most important member of the board. An effective chair will oversee governance practices, will advocate for the CEO, and will hold the difficult conversations that may be required with the CEO or directors. The fortunate CEO has a chair that effectively advises the CEO and serves as an important mentor and advisor.
Other responsibilities of the board chair are as follows:
•Available and accessible to the CEO to advise on strategic decisions and how to appropriately execute on the approved strategy.
•Asks great questions. An effective chair (or director) will ask thoughtful, thought-provoking questions about strategy and organizational performance.
•Is decisive and action-oriented, particularly to ensure that the board is meeting the standards of governance and its fiduciary responsibilities. Will step in without hesitation and lend support in a crisis situation.
•Actively participates in strategy and succession. The best board chair leads board approval of strategy but does not overstep and attempt to develop the strategy. Good chairs demonstrate ownership of CEO succession.
•As noted earlier in this chapter, director roles are time consuming and this is particularly true for the chair. A board chair is expected to demonstrate his or her full commitment and to be highly engaged. The chair sets the tone for all directors through his or her active commitment at meetings, in all discussions, and so on.
•The chair collaborates with the CEO to establish expectations and set agendas, rules of engagement, and decision-making processes.
•The chair shows the way in building professional relationships with key members of the management team. He or she understands the responsibilities, the areas of expertise, the personalities, and the career ambitions of each of these individuals.
Responsibilities of Directors
•Directors are expected to advise on strategic decisions and provide thoughtful, actionable guidance on implementing the strategy. Like the chair, the best directors are accessible to the CEO as required.
•Capable directors ask probing, penetrating questions and do not shy away from asking tough questions of the CEO or their peers. They demonstrate leadership courage, just as identified for the 360
•Directors act decisively and will step in to assist during a crisis or situations in which more effort is required. The best directors maintain a deep commitment to the performance of the organization, and this commitment clearly is reflected in their level of engagement on issues of critical importance to the performance of the company.
Neither Friends Nor Confidantes – CEO and director relationships are unique from other relationships. The directors are not friends, nor are they confidantes. In some situations, they may end up acting in one of these ways but that is not always the case. Directors must hold CEOs personally accountable for the success of the company. Some new CEOs are surprised to discover that while they think they now have carte blanche to run the company, sometimes years after vying for the role, they now have 10 to 12 bosses.
