It’s a central quandary for CEOs: How can you deliver transformational leadership when your ability to execute depends on a group of people you don’t hire, can’t fire and have to influence without direct authority? That is, your board of directors. Navigating the CEO-board dynamic is one of the most critical and underappreciated challenges of executive leadership. Given the high stakes, it’s surprising how little attention has been paid to the way CEOs can manage it over time — as the CEO grows in the role, as the composition of the board of directors evolves and as new business challenges arise.
S&P 500 CEOs serve for an average of nine years, a period during which they face sweeping changes in both their businesses and their relationships with directors. Yet most new CEOs are caught off guard by how much time and attention the board relationship demands. To be successful at it CEOs have to recognize that working with the board will involve a shifting approach during the course of their tenure: gaining
trust in the early days, when they’re under the microscope; developing the board into a strategic ally as the relationship matures; maintaining a posture toward the board that
encourages debate and engagement; and ultimately shaping the board’s future leadership.
There’s a significant price to pay for getting it wrong. Allow the board to become too involved in short-term performance and you’ll spend your tenure fending off counterproductive strategy pivots; fail to engage the board sufficiently and you’ll lack the oversight needed to guard against complacency and excessive risk. For years we’ve been thinking about how CEO-board dynamics play out. One of us (Doug) served as the CEO of S&P Global for 11 years, and the other (Claudius) is a veteran
leadership adviser who has conducted research analyzing the performance of more than 2,000 S&P 500 CEOs over two decades. In this article, drawing on our extensive knowledge of CEO and board performance, we’ll lay out a four-stage framework designed to help CEOs build a productive partnership with the board that creates the healthy tension essential for effective governance and strong company performance.
Each stage requires pivotal shifts in a CEO’s thinking and behaviors.
Idea in Brief
The problem
CEOs must lead transformations while relying on boards they don’t
control. Many underestimate how much their relationship with the
board must evolve and how mismanaging
it can yield poor strategy, weak oversight and even a premature exit.
The solution
Adopt a four-stage approach to CEO-board collaboration:
- Build trust early by understanding board dynamics.
-
Shape the partnership by influencing composition and engagement.
- Fight complacency as trust deepens.
-
Focus on succession and long-term governance.
The payoff
CEOs who adopt this approach to their board relationships build productive tension, stronger governance and better long-term
performance. The result is a board that’s a strategic asset rather than a constraint.
Read the full article on hbr.org