It seems self-evident that communication is the key to establishing a solid relationship between the board and the CEO. But what if there is a lot of talking going on, but not a lot of listening? Marisol Angelini says to ensure fruitful communication between a CEO and a board, you must first have trust — and the process of establishing it starts as early as the interview process.
“You have to make it a fit for you and a fit for the company. And to me, it’s not after you get on the board that you start that connection. It’s when you are interviewing with the CEO or the nom/gov chair or the board members,” says Angelini, director of AMVAC Chemical Corporation and former director of Bush Brothers & Company. “It’s so important that you use that time to ask the questions that allow you to analyze if you have a foundation where you can build trust on top of that. Because that trust is actually the glue that allows all of that technical expertise that every one of us can bring to a board to really come through.”
So that’s the director perspective of our panel on the board/CEO relationship. What’s the opinion of Todd Schnuck, who serves as chair and CEO of family company Schnuck Markets Inc.? He states that thorough, well-intentioned communication and the trust that comes along with it were invaluable six years ago when Schnuck Markets transitioned from an advisory board to a fiduciary board.
“It’s very important that you have a good, strong relationship with your board members, whether they are family, shareholders or independents, so you can bring everyone along in that process,” says Schnuck. “You have to be intentional about providing that context. Communication, both at the meeting and outside of the meeting, is really important.”
To Schnuck, just as important as his keeping the board informed is his own listening and information gathering. That’s why he takes advantage of the time between Schnuck Markets’ quarterly board meetings to get in touch with his directors.
“I always have a follow-up call with my board members about two weeks after each board meeting. It’s a great opportunity to ask questions. You can’t miss an opportunity and not hear about those ideas until three or four months later.”
Angelini agrees, stating that ongoing communication is a critical function and perhaps even more beneficial than the discussion inside the boardroom. “I think that the conversations and the communications at the board meeting are not as valuable as the ones you have outside those board meetings, whether it’s at dinners before and after the meetings or in those one-on-one follow-ups. Whether it’s an email, whether it’s a phone call, whether it’s a direct discussion, it’s super important to use every opportunity.”
So communications between the board and management are vital between meetings, but should a director have immediate access to executives other than the CEO? Schnuck says that his directors have “carte blanche” to reach out to any member of the Schnuck Markets management team, but every once in a while he has had to give the old “noses in, fingers out” admonition.
“We’re not trying to hide anything. We want that knowledge. And it’s also a great opportunity for management to hear directly from a director, hear what their questions are and how they are thinking about issues,” says Schnuck. “I’ve had to make it clear once or twice that it’s great to have that conversation, but I would appreciate it if you didn’t try and tell an executive what to do. It comes back to understanding roles and responsibilities rather than who’s managing versus who’s got oversight of the enterprise.”
The management of companies for which Angelini is on the should be happy to know that they will not be getting a call from her unless it is a clear value-add.
“I feel lucky that I have the permission to call management for whatever question I may have on something that I am reading or something that I see is coming up, but I think there needs to be some guidelines for that communications,” says Angelini. “We need to be cognizant that they are running the business and their agendas are super busy. I think we need to be very intentional and really question ourselves before picking up that phone. If it’s not value added, then it’s just more work.”
But let’s say the reason for the director’s call to management has been fully vetted, it’s been deemed an essential and the phone has been picked up with full intention to touch base. What is another way to make sure that said call lands in a way that is productive for both the director and management? According to Schnuck, all parties should recognize that “Nobody has a monopoly on good ideas.”
“The art of listening is very important. Listen to understand. Don’t listen until you have a chance to put your viewpoint out. Force the management team to provide that answer and have a solid rationale behind it. And if we don’t have that answer as a management team, we’ve got some work to do.”