September 25, 2020
The critical relationship between the chair and the CEO
The job of the chair is multifaceted, so it is hard to single out particular guidelines for success. However, the one element in every successful chair is an effective relationship with the CEO.
You will have already spent quality time with the CEO during the appointment process, well before deciding whether to take up the post. Your ongoing relationship must be based on mutual respect and trust, short of close friendship and yet not arm’s length.
You can make life less lonely at the top for the CEO by acting as a sounding board, mentor and advocate. The demands on today’s CEO are extraordinary. A relationship with the chair based on mutual trust and regular contact can make for a powerful partnership.
As the board chair, you are ideally placed to form a dispassionate view of the CEO’s performance, taking into account the views of fellow directors. Nothing about your relationship with the CEO need compromise your freedom to take action and remove the CEO if that is considered by the board to be in the best interests of the business and its shareholders. When the CEO departs, your continued presence in charge of the board reduces the level of trauma in the business. While the CEO is in place, you can play a helpful role in succession planning.
If your relationship with the CEO is flawed, whether too close or too combative, all other board functions are under threat. The implications for the company at large, beyond the board, can be serious.
But how to build and develop a good professional working relationship over time? The answer is through a clear understanding between the two of you concerning your respective roles and obligations. That understanding should be based on a number of guiding principles, as follows:
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The two roles must be complementary, described in well-defined, terms. You are responsible for managing the business of the board while the CEO runs the business of the company.
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You and the CEO must ensure that you are each appropriately informed of the other’s current areas of activities. How often you choose to meet is a personal matter, but the protocol, including frequency, should be clearly understood by both sides. Some communicate all the time, informally by text, others hold a weekly meeting. Most CEOs loathe a formal agenda for such meetings; an exchange of current points and questions is better.
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You and the CEO must be seen to work closely together as a team. Your relationship is one of mutual trust.
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The relationship must be frank and open, with problem areas being addressed early. It is vital that the CEO can share ideas and concerns with the chair. You should be prepared to act as a confidant, but it is a partnership in which you are the senior partner.
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You should have direct access to senior staff as you deem necessary. Familiarise yourself with the marzipan layer – the executives who report up to the C-suite. Plan how you will go out and about to get to know the business on the ground. Methods include site visits, participation in occasional team meetings or informal dinners with groups of key players.
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Decide whether to have an office on site and how often to be there. A physical presence of some kind is essential; absentee landlords are not appreciated.
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You and the CEO must agree on your respective roles vis-à-vis major tasks and new initiatives.
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You should have a shared vision for the long-term future of the group.
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There should be agreement on the fundamental strategy for the group and for the accumulation and allocation of capital.
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A shared approach to dealing with public affairs and employee relations should hold. It is vital to agree on principles and who does what. In normal times, the CEO would lead on both matters, drawing on the advice of the chair.
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Encourage your CEO to provide views on your board directors and their contribution.
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These guiding principles should only be modified by mutual agreement.
In my next blog I will explore how the chair manages the board.
This article is an extract from Becoming a non-executive chair, a guide for people who aspire to become chair of the board or are becoming a chair for the first time. It describes the steps to becoming a chair, what the role involves, and the personal characteristics needed to chair a board effectively.
If you would like to discuss any of the issues raised in this blog, please contact wdawkins@spencerstuart.com