One of the most important relationships inside the boardroom is between the CEO and the board. No matter how capable the CEO and each of the board members are individually, the quality of leadership and governance depends heavily on the interaction between them as well. The board’s role is to provide oversight and direction while the CEO carries out the strategy. Building an effective board-CEO relationship requires effort from everyone involved.
The same wavelength
The CEO and board have to be on the same wavelength. In order to get there, both parties need to understand each other’s perspective. However, at the end of the day, the board of directors has an advisory role, while the CEO’s job is to execute and manage. This dynamic can make it challenging to build and maintain a relationship. When everyone agrees, the decisions made inside the boardroom will come to fruition throughout the company. The situation is more challenging when the board or CEO is not fully convinced or struggles to understand the other side’s perspective. With many strong leaders around the table, one can expect different views. That is when the relationship between the two is critical for long-term success.
A strong board-CEO relationship creates a platform for open communication and trust. The directors and CEO step inside the boardroom with good intentions. Everyone around the top table is there to work together towards the best strategy and not to force their own vision upon the organization. In a healthy board-CEO relationship, each party feels safe to disagree; there is room for frank discussions. However, the board and CEO also have to understand that if an agreement is reached at the end of the discussion, everyone should support that decision whether or not they agreed to it as an individual.
To each their own
Another key element in a successful board-CEO relationship is that everyone understands their position and role. The board is there to provide guidance and expertise, not to jump in and solve the issue at hand. When the executive performance is exceptional, it is also the board’s responsibility to acknowledge this – and reward the CEO if appropriate. The board operates on the strategic big-picture level, while the CEO is on the ground running the company. To maintain its effectiveness in guiding the CEO and company towards success, board members have to continue to learn and stay current on critical board topics.
Changing relationships
As in any relationship, business or personal, both parties need to continuously work on the relationship together. When a new CEO joins the company, this can be even more challenging. Sometimes the former CEO transitions into a board role, changing the dynamic for everyone in the room. Not only is someone new taking the CEO seat, but the board composition itself changes with the former CEO switching sides. Board members might have to put more effort into the relationship with the new CEO to make sure strong connections are developed and maintained. Similarly, when a new director joins the board, the CEO and other board members have to expand and re-establish the relationship.
The board and CEO share the mutual goal for the organization to succeed. A strong board-CEO relationship benefits collaboration when sitting around the top table but also results in better outcomes. Developing a solid partnership between the board members and the CEO takes time but is worth the effort.
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