On January 21, I moderated a roundtable of distinguished current and former public company CEOs focusing on the relationship between the public company CEO and his/her Board of Directors. Our speakers were Penny Herscher, Joe Burton, Michael Hurlston, and Moshe Gavrielov. This webinar was hosted by the Silicon Valley Directors Exchange (SVDX.org).
Some highlights of the discussion and the survey we conducted before the roundtable:
CEO and Chair Relationship
A Chair is not your friend, but he or she should be a safe place to talk. CEOs realize enormous value from having a strong Board Chair. The best Chairs effectively manage Board membership, recruiting new board directors who have relevant experience and are willing to put in the time. A great Chair will also act as a focal point for the CEO’s interactions with the Board, making sure directors get timely updates between meetings when needed, so the CEO doesn’t have to reach out to each director individually. With a good Chair managing the board dynamic, the CEO can focus on running the company while still keeping the Board informed and involved.
Recruitment of Directors
The panelists agreed that CEOs should be directly involved in new director recruitment, especially in identifying the types of director skills and experiences that will be needed going forward. They wanted CEOs to be part of candidate assessment, and felt they should probably be able to veto director candidates if the CEO felt they would not work together effectively. This can be done without undermining the independence of the Board.
Chairs need to play a big role in managing directors off the board. One performance issue observed was that of energy level, with some long-term directors slowing down and needing to retire from the board. CEOs don’t have the time to manage those discussions, so the Chair must take ownership of the process.
Board Members Need to Have the Time to Help Outside of Meetings
Our CEO panelists felt strongly that board members should be available between board meetings. As a group, they welcomed coaching, advice, and management development directly from the board. CEOs want board members who will make themselves available for informal discussions and consultation.
Boards need to Lean in During a Crisis
During the COVID pandemic, but also during hostile takeover attempts or other company crises, boards may need to step up the frequency of meetings, and be fully available to discuss and come to consensus on risk tolerance and future plans. Directors will need to make time for the CEO, sometimes talking several times a week, and then support the CEO’s action plan despite the uncertainty around the situation and possible outcomes. During crises like COVID, directors who sit on other company boards are a resource, as they have knowledge of how other companies are dealing with problems.
Current and Former Public Company CEO Survey
In conjunction with SVDX, my firm conducted a survey asking current and former public company CEOs to rate their boards and answer several open ended prompts, including what advice they would give new board members.
New Board Member Advice from the Survey
The top CEO advice is summarized here:
- Do the work necessary to understand the business, including a deep dive on the technology and the industry. One respondent indicated that directors should work to keep up, and not require re-education at every meeting.
- Engage in healthy communication with the CEO. One piece of advice was to surface tricky issues with the CEO one-on-one outside of the full board meetings, in order to build candor and trust.
- Spend more time (but not too much) on company strategy. CEOs in the survey gave their lowest rating to their board’s contributions to the strategic success of the company. In the comments, it was clear CEOs wanted their boards to play more than a governance role, and to be engaged in strategy development. In particular, the CEOs said they valued the board using tough questions to help management improve the quality of their strategic thinking.
- Support the CEO by committing to decisions once they are made. Once a strategy is agreed upon, however, CEOs want trust and some running room for the organization to achieve results. They do not appreciate being second guessed at every board meeting.
For other results of this survey in Powerpoint form, and for more details on this roundtable, please go to the SVDX website for more: What CEOs Need From Their Boards