As we place CEOs and work alongside of their boards through the onboarding process, we have found ways through our years of varied experience to help minimize the risk of CEO failure. For first time CEOs, the primary reason for failure is the inability to build good relations with board members. For experienced CEOs in a new position, a new board likely brings a different culture and developing new relations can be more difficult than expected. Yet, it is critical to the success of the CEO to build the trust of the board overall, which includes developing relationships with individual board members.
Given this challenge and the current business environment discussed on our recent Global Board & CEO Practice call, we find it timely to highlight tips that may be helpful.
DHR Partners reported clients are carefully evaluating their current CEO’s success, holding them accountable to higher standards. New CEOs have not been given much time to deliver profitable results and growth has become a measurable KPI with little patience for missed targets. Thus, companies are seeking CEO coaching, CEO succession planning, and executive search services more frequently and with a renewed sense of urgency.
The National Association of Corporate Directors (NACD) outlined some of the relationship responsibilities of a CEO as they relate to the board of directors. These include:
- Setting expectations about the relationship to ensure the board is a supportive force
- Developing transparency with the board of directors can establish a mutual sense of confidence and trust
- Establishing clear avenues of communication, which fosters a sense of engagement and can minimize ambiguity
Furthermore, CEOs and boards of directors may have to face conflicts of interest with one another. These disagreements, while they may be built on fundamental differences don’t have to threaten a company’s short-term success or long-term goals. How disagreements are addressed can minimize their impact.
When conflicts of interest arise, it is helpful for CEOs to see the board’s point of view and vice versa. A CEO who seeks clear communication with the chair of the board will often find resolution. Every situation is different; however, relying on the principles of strong communication and conflict resolution will often mitigate a worst-case scenario.
Moving the Needle on Board Diversity
Through Partnerships & Education
DHR is proud to be enhancing diversity in the boardroom with our participation in the Harvard Business School Executive Education Accelerating Board Diversity program.
Heather Smith, board diversity advocate and esteemed speaker on increasing board diversity, is sharing best practices with senior executives from underrepresented minorities on how to secure and excel in board positions.