What CEOs Need From Their Boards

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:

1. 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.
2. 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. 
3. 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. 
4. 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