Voices of Experience

The relationship between the board and the CEO can be a tricky one. Board members must provide counsel to the company’s chief executive while also offering constructive criticism. We asked several directors: What is the #1 thing a board must do to ensure a solid, productive relationship with the company’s CEO?

 

Build Trust Individually and Collectively

As board directors, we must contribute both individually and collectively as a team. Individually, we must always support the CEO, even in the face of disagreement. In fact, these situations underscore our unique role of providing additional perspective, outside-the-box thinking, hindsight assessments and learnings from other industries that are vital for the CEO to make well-informed and better decisions.

From a collective standpoint, the board must strive to be a high-performing team aligned to a unified vision, delivering general and specific advice, creating a culture of camaraderie and healthy debate, encouragement and skepticism, and leveraging team member’s unique skill sets.

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In both situations, building trust is the one thing every board director must do from day one to have a productive relationship with the CEO. It is also the most challenging responsibility and the one that requires quality time and effort. Board directors must create opportunities to build that trust with open communication, which starts during the interview process. Being engaged and asking all kinds of questions during the first months of the relationship allows for noncritical debate and questioning, which are very useful for the CEO who is getting a fresh-eyed perspective on business matters.

As time goes by, continuing to offer open communication, good listening skills, feedback, praise and encouragement to the CEO builds the trust that is necessary to have difficult conversations, but also to become that board whom the CEO can confide in and seek advice from.

In essence, a board must do its job of overseeing the company’s results to build shareholders’ value through the CEO. And even though it has no authority or decision-making rights, it must exercise its influencing rights to inspire the CEO and be the go-to resource that gives him or her confidence to be a highly effective CEO.
 
— Marisol Angelini

Angelini is a director of American Vanguard Corporation and a former director of Bush Brothers & Company.

 

Establish a Strong Personal Connection 

It’s imperative that the board develop and maintain honest, open dialogue and have genuine interest in the CEO’s success, building mutual trust and respect. Shared values and agreed-upon goals must be developed as well as performance standards for the CEO and board, including CEO input. Provide worthwhile guidance on big decisions, exercising integrity and leveraging your personal networks in the event of crisis to benefit the CEO. Focus on complex, big-picture questions that bring opportunities or challenges to the company. Provide oversight and hold your CEO accountable.

It’s vital to position yourself as a mentor and learn everything you can about key factors in the company so that you can contribute genuine value as a resource. Draw on your own relevant experiences and be a continuous and prepared learner. Understand the risks the company faces strategically, operationally and financially; stay current on best practices; have the hard conversations; utilize good judgment and intellectual curiosity; keep an open mind; and be creative and innovative. Use social time as an opportunity to create rapport between the CEO and board members. This is a top priority built on trust and goes two ways. 

Be willing to have periodic conversations with the CEO outside of structured board meetings to get a sense of how projects are moving along, priorities are shifting or new ideas are evolving. This can provide the CEO with a trusted-partner perspective on new initiatives and a sounding board for strategic decisions regarding more day-to-day challenges. 

— Valerie Woerner

Woerner is a director of Matot, Michigan Ross Alumni Board of Governors and The Capitol Theatre.

 

Develop a Meaningful Dialogue

I have worked as a board director with numerous CEOs across private and not-for-profit organizations. In my experience, the most effective relationships between the CEO and the board were a result of deep and candid dialogue, both inside and outside the boardroom. Vigorous and candid dialogue does not fully develop within the parameters of structured quarterly board routines, but is developed outside the boardroom with the CEO, among board directors and committee chairs. Establishing meaningful dialogue is a continuous process of inquiry, listening and learning that begins with board seat interviews, in executing the onboarding plan and through the duration of board service. 

My first private company board seat was with Rabobank, and we established upfront clarity on how the chairman and CEO wished to utilize my experiences at Bank of America. Through the onboarding process, I talked with the full management team enabling me to hone in on strategic imperatives and challenges and detect any inconsistencies. Since the agriculture sector was new to me, I also invested in outside learning and discussions with business leaders to better understand opportunities and differences in credit risk management. This was invaluable as proposed tariffs were announced and the risk assessment had to be revised.

In my role as the compliance committee chair, it was critical to establish ongoing and proactive dialogue with the other committee chairs outside the standard board routines to hone the enterprise risk assessment and reduce surprises. Having the full 360-degree review across the audit, risk and compliance committees enabled us to optimize our board meeting discussions and tackle emerging issues.

Ultimately, the parent company decided to divest the subsidiary, and because of the sound foundation of candid dialogue between the CEO and board, we were successful in oversight of the bidding process and merger plan to Legal Day 1.

— Tracy Grooms

Grooms is a director of Goldman Sachs and a former director of Rabobank NA.

 

Communicate Between Meetings

Having occupied a seat on both sides of the boardroom table — as a CEO and as an independent director — I can say that keeping communication channels open beyond the formally scheduled quarterly board/committee meetings is the most important practice a board can embrace to ensure a solid, productive relationship with the company’s CEO. 

When COVID hit in 2020, (virtual) meeting frequency seemingly went from quarterly to weekly. Certainly, no one (especially the CEO) wants to go back to that meeting cadence. That said, the pandemic changed how the board and management both processed information and made decisions in real-time. The shared learnings from those deeply uncertain times forged new learnings and connections between directors and the CEO. 

As we step back into a more reasonable cadence of communications, I have seen many boards schedule interim update calls (lasting one to two hours max) in between board meetings. Routine updates enable the CEO to address what is likely the same questions from multiple directors and reduce the likelihood of “surprises” (which no one likes) at the next quarterly meeting. In addition, I have seen committees (now well-versed in holding virtual meetings) using off-cycle sessions to get more work done. As a result, quarterly meetings are less “death by PowerPoint” and more about substantive discussion on the critical few issues. 

Open communication between the board and management has always been the foundation for a good relationship with the CEO. The pandemic deepened the ways this dialogue has occurred both in frequency and in substance. 

— Mary Lee Schneider

Schneider is a director of The Larry H. Miller Company, PGIM Private Real Estate Fund and Active International, and a member of the board of trustees of Pennsylvania State University.

About the Author(s)

Bill Hayes

Bill Hayes is managing editor of Private Company Director.


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