The Invaluable Resource of the Board & CEO RelationshipJan 09, 2024
- By Sophie Pinkoski
Does the board and CEO relationship truly drive an organization's success? In a recent survey, McKinsey managed to narrow down six key factors behind a successful leader and found an effective board to be top of the list.
One of the most crucial things an organization can do to bring its board to this level is to cultivate a culture of engagement.
After all, the board is a powerhouse of expertise, strategic insight, and diverse perspectives designed to advise the decision making process. If leveraged well, the board's performance can significantly benefit the organization in the short and long term.
Building a strong CEO/board relationship is thus essential.
Mutual respect is key. A foundation of trust and honesty encourages openness in meetings and one on one interactions; when individuals feel valued and heard, they are more likely to make meaningful contributions to the discussion. The CEO's transparency with the board should also include sharing the organization’s limitations and challenges as well as strengths and opportunities. With a detailed picture of the organization’s realities, the board will be better informed about how best to contribute to long-term success.
This relationship between board and CEO must be properly fostered in order to garner the best advantage from the directors’ expertise. Here are ways to leverage that expertise:
Tap into the board as a valuable resource –– While the role as CEO is to oversee operations, the board’s responsibility is to oversee strategy, risks, and performance.
It’s up to the CEO to give the board the information needed for them to make informed governance decisions.
Beyond the information that the CEO can provide, the board should include individuals who each bring unique knowledge and skills to the organization to fill crucial knowledge gaps. A diversity of perspectives and expertise makes for a more competent board due to the breadth of knowledge available during discussions. Each board member should be encouraged and supported in adding value in their own way. Not only do they come with their specialized skills, but they also come with their own network. Where appropriate, the organization can engage those connections to advance strategy and increase perspectives on issues.
Communicate with transparency –– It’s important for the CEO to keep in regular contact with the board.
CEOs need to keep the board informed of any governance-level or quickly escalating challenges and opportunities that arise so they can be addressed as soon as possible.
Of course, open communication goes both ways; the CEO must build a dynamic with the board that allows both to lead from their respective roles. CEOs should remain up front with the board about what’s working and what is not to improve the board process. In addition to their fiduciary duties a board is there to be the CEO's trusted counsel –– give them the tools to do their job well and listen to their feedback.
Engage with the directors outside of board meetings –– The most successful organizations owe their effectiveness to their CEO seeking out their directors’ expertise beyond board meetings. One on one sessions make it easier to receive feedback and share information away from the noise of the group. After all, silence within a meeting doesn’t necessarily mean each board member agrees with the consensus or has no further value to add.
The CEO should let each board member know that their perspectives are valued by asking for their perspectives outside of meetings.
Preparing questions for the board in advance of individual meetings also gives the board member time to prepare and collect their thoughts for a more robust, efficient discussion. When they have the chance to share their perspective with the CEO, board members gain confidence and trust in the CEO. By soliciting one on one sessions with each director, the CEO will gain a better sense of where everyone’s strengths lie. Ultimately, this leads to better board engagement.
Offer learning and development opportunities to build board competencies –– Boards go through a natural turnover cycle which regularly bring fresh voices to the table. But in bringing new faces onto the board so frequently, it’s important to find balance in building the directors’ competencies. New board members require training to help adapt their skills and knowledge to apply it within the organization’s context. With the fast-paced dynamic of today’s ever-changing environment, it’s not just new directors who require development.
Board work requires constant education to keep up with the change the organization experiences in real time.
Each board member should stay informed on new practices, trends, information, and technology relevant to their organization’s governance. Part of staying up to date on the industry is to future-proof your organization for long-term success. The board should be able to adapt to the times for effective strategic planning, succession planning, risk assessment, and crisis management.
The board is an asset that, when properly activated, can significantly impact your organization’s success.
Foster a culture of trust and transparency by embracing diverse perspectives and developing board competencies.
Leverage directors’ expertise to navigate your organization's biggest challenges, drive innovation, and achieve sustained growth. Embrace the board as the CEO's trusted counsel and listen to their invaluable insights for the betterment of the organization’s future.
How CEOs and Boards Can Leverage 3 Keys to Soar in Unison, Caroline Brereton- On Care
5 Ways CEOs and Boards Can Work More Effectively Together, Chief Executive
How to Increase the Board’s Impact in Volatile Times, Ernst & Young