Board or Bored Relations?
For the CEO of a company with a fiduciary board (as opposed to an advisory board), there’s perhaps nothing more complex than developing a healthy, mutually satisfying relationship with the board. I’ve been on numerous boards, worked for a few and observed many management-board relationships up close and personal. Few of them work on the relationship rather than just being in the relationship. This can be catastrophic (whether at home or at work)!
When I was a young CEO, I worked for a board that a private equity firm controlled. This was a turnaround situation, so I had some initial leeway to be brash and demanding, because we had to do some emergency surgery to keep the company alive. I quickly did my best to keep the PE guys at arm’s length and had some success. Luckily I had a wise attorney who pointed out that this may not be a good long-term strategy and that when things turned around I’d have worn out my welcome. Good advice!
My mindset then wasn’t one of partnership. I had a whacky founder and a pedantic small shareholder on the board, and I saw it as a pool of glue that slowed me down.
Since then, I’ve worked with numerous boards and executive teams and observed highly functioning relationships along with some dysfunction. Below are a dozen observations I’ve made of healthy, valuable relationships between the board and CEO. I won’t go through a litany of legal and fiduciary rules; there are plenty of high-priced lawyers to do that. I’m interested in how a CEO can optimize the relationship, which of course requires a talented chairman and willing board.
1. Be a peer. Yes, you report to the board; it controls your compensation, approves your strategy and should monitor your results, but develop a peer-to-peer relationship with the members. A board is a bunch of individuals, and it behooves you to think of them that way in your interaction between the board meetings.
2. Make your expectations clear, and make damn sure you understand theirs. What does a win look like? You may have to ask. Be clear about how you’ll communicate, and drive effective meeting cadence and practices.
3. Demand a performance review or structured feedback.
4. Expect members to spend time understanding the business. Facilitate this by sending them good, balanced information and getting them to educational events.
5. Don’t try to deceive them. Boards, like bankers, hate to be surprised. Establish a “no surprises” policy upfront in your tenure.
6. If you have weak members, carefully lobby for their removal.
7. Make board meetings fun. Board members shouldn’t be bored.
8. Stick to strategic issues (see No. 2). Gain consensus that you won’t spend much time in the weeds, and when you get there, get back on the fairway!
9. Spend as much time and energy with members you don’t like as with those you do.
10. Don’t let board members be prescriptive with your team, but make sure they’re exposed to one another.
11. Learn to simplify, frame and explain complex issues in language that is clear. If the board is confused, you’ll get bad direction from them.
12. Recognize that you sometimes have to fight for what you believe is right.
This relationship is as hard as, or harder than, marriage. If you don’t work on it, it won’t last.