What’s changed about the relationship between Boards and their CEOs?
The answer is a simple word, respect.
And, simply, respect is leading to a collaborative détente as to how Boards and corporate leaders are working together to carry out their respective responsibilities.
Yet, “trust but verify” and transparency remain at the heart of board governance. CEOs, seek from their Directors, an appreciation for the scale and the complexity of the commercial changes and economic landscapes that they and their leadership are constantly addressing… the controllable and uncontrollable. And, Directors seek anappreciation by their CEOs of the responsibilities that as board members they arecharged with carrying out.
The Future of the Board-CEO Partnership…
In consulting with Boards and in our executive search engagements, we have noticed a marked improvement in the ways that Boards and CEOs are relating. We sense that their relationship is maturing, moving beyond check the boxes compliance and how best to address enterprise risks.
Boards and CEOs are recognizing that they are in the boat together and that a “gotcha”mentality is a prescription for failure on both sides.
There appears to be a concerted effort by Directors and corporate leaders for a higher level of collaboration on all major decisions with each side respecting the roles and accountabilities of the other.
This new spirit of inclusion and trust, we sense, is leading to candid, necessary, and invaluable conversations, the elements of more thoughtful dialogue and decisions.
Now, it’s about discovering value and collaborating on the art of the possible, together.
Take corporate strategy…
Many CEOs believed that Boards were not very concerned with strategic challenges and by all indications, perhaps, they were right. Directors, in many cases, were geared to “need to know” compliance and risk matters and gave little indication that they were interested in anything more than a cursory strategic overview. And, CEOs, many of whom are Board Chairpersons, didn’t feel obliged to push and pull the Board along these lines. Often, Directors found strategic discussions interesting but less important.
Yet, in several recent surveys, Directors pointed out that too little board meeting time was devoted to strategic discussions and too much effort was spent on past results and events..time well spent but at a cost of too little on forward thinking. Clearly, Directors sought and are demanding a deeper involvement in setting the strategic course and CEOs and Chairpersons, and Lead Directors, are welcoming these discussions, a sea wave change.
Today, Boards are becoming increasingly committed to fully understand and appreciate the ins and outs of the strategy and strategic implications of their companies. Board members are becoming fully invested.
As a Chairman of one of our clients succinctly put it, “knowing where we are and what impacted us, is important, but as Directors, we are more interested in knowing where we are going, why our CEO wants to go there, how are we are going to get there and what can we, as a Board, do to help us win?”
Boards seek exploration and CEOs are acting as good faith guides.
And, more often, leadership is valuing Board of Director wisdom, context and insights. Accordingly, CEOs and Directors are “investing” in each other, beyond their obligatory relationship. Each recognizes the value of the “partnership.”
No longer, in the most progressive governance circles are Boards and CEOs treating each other as adversaries. Knee jerk reactions and trying to cover up or take advantage of each other’s shortcomings are passé. The stakes are too great.
Respect leads to trust. Trust leads to enhanced value.
Hopefully, this trend will continue in 2012. We’ll observe and report.