Author: John Harte, Advisory Member of the Chairman’s Network and Managing Partner of Integrity Governance, which serves boards around the world
6 Oct 2020
The pandemic has fundamentally challenged assumptions, business plans and our views of business risks, rewards and opportunities. The impact of a health crisis that threatens to become the worst economic depression since World War Two is making boards of corporate directors nervous.
Some boards are embracing the challenge while others are uncomfortable as their cosy pre-retirement plan of serving on boards has just become far riskier and demanding than they ever expected. The assumptions around risks are being challenged in unforeseen ways.
The really good boards with high performing CEOs and managers have trusted management. These boards have stayed out of operational issues; using the time and opportunity created by COVID to focus on strategy and risk while assisting their CEOs with wise counsel and support
Yet, even before COVID, PWC’s 2018 CEO Success Study showed that “turnover among CEOs at the world’s 2,500 largest companies soared to a record 17.5% in 2018.” Now in a post-COVID world CEOs are under greater scrutiny than ever as boards grapple with gaining the best return for the risk being taken with the company’s capital, and in a world of increased uncertainty, changed opportunities, disruptive events and new technology. Some businesses will thrive in the new world while some will not – boards need to have confidence that CEOs can understand, respond and lead in times of change.
It is crucial that CEOs build a strong and healthy relationship with their board so they can manage their board during turbulent times, to achieve alignment and success. In this article, European CEO outlines its top five tips to help CEOs gain the best from their board in these different times.
Create clear expectations
The relationship between the board and the CEO is based on trust and respect. Take the time to talk with the board to ensure that you and your board have the same expectations. What will success and good performance look like in these different times? Clarify assumptions and recognise that clear, mutually agreed expectations between board and CEO are a recipe for success just as assumption and guess work may lead to disaster.
Work on a ‘no surprises’ basis
Surprises should be reserved for infatuated lovers and children; they have no place in the boardroom let alone in an effective relationship between the board and the CEO. Work on a ‘no surprises’ basis with your board. Be accountable for working this way and hold your board accountable for reciprocating the trust.
Be willing to field and to ask the tough questions
In a world of change and disruption you must be able to challenge and be seen to challenge assumptions and ask the tough questions about the business, its strategy and performance. CEOs need to be the leading light and, if you as leader of the company aren’t demonstrating leadership by asking those hard-hitting questions of the business, then fully expect the board to be asking them of you and questioning your leadership.
It’s all about the people
Our initial response to the COVID crisis was around the safety of our staff, customers and stakeholders. The initial focus on physical wellbeing has broadened to address the negative impact that this crisis is having on the mental health and wellbeing of our people. The COVID crisis has shown that some CEOs are guiding lights while some are simply lights. Think about your people, the strength of your top team. Think about the need to generate confidence and credibility with the board that you and your team have the bench strength to win in a world of different opportunities. Businesses are generating and destroying trust with the way they respond to COVID and work with their people. Mistakes made at this time will sear the culture of organisations and trust in boards and CEOs. Trust, honesty and openness through clear and regular communication with your board is critical.
Don’t waste a crisis
Necessity is the mother of invention. The need to move fast and break things in order to adapt and respond to a health and economic shock has heightened the pace of innovation. Successful CEOs have demonstrated a willingness to cut through inertia and make changes that will enable their businesses to move from survival to thriving in a different world. Think about what’s working well and what is no longer working. Bring you board on the journey of the changes to people, processes, tools and technology that will enable your business to thrive under your leadership.