Who is telling the board which decisions to make and how to structure the board? Often the answer to that is ‘the CEO.’ One online survey confirmed this notion by revealing that the CEO and management have the biggest influence on the Board’s decision-making freedom. Realizing this, it is essential for boards to protect themselves against this possibility. There are seven ways to accomplish this independence. This article addresses each of these ways.
- Ask critical questions
Information remains hidden and risks can go unnoticed if the board does not ask critical questions. A sample of these questions includes:
- Have we looked at this issue from the perspective of all stakeholders?
- Is there any information which would have been beneficial but we were unable to collect?
- What are the benefits of this decision to the organization?
- What are the disadvantages to this decision?
- How would this decision support the work of the CEO?
- How would this decision remove responsibility from the CEO and put it on the shoulders of the board?
- Why couldn’t the CEO deal with this issue?
- Is this a governance or management responsibility?
- Why would the board need this committee?
- What about this issue makes it a governance issue?
A CEO may attempt to influence the board to move the entity in the direction of his choice. This does not mean this is best for the entity. A wise board keeps responsibility in the right office and ensures it holds that office accountable for the results it achieves.
2. Assist the board chair to ensure he is not overpowered or coerced by the CEO
A CEO can use many tactics to get to know and influence the board chair. Some of the more common ways include
- Engaging in sporting activities with the board chair
- Socializing with the board chair
- Appealing to the board chair on an emotional level
- Making the board chair feel as if he knows much more about the issue and the board chair should take his advice
- Hounding the board chair by keeping an issue front and center until the board chair brings it to the board
If a board serves in a small geographical area, a board chair is more easily influenced than if the board chair is in less contact with the CEO. Also, the board chair is responsible to establish the difference in the role. He insists that the CEO respect that distinction.
3. Ensure the board receives thorough professional development in governance
One way to keep board members in the dark is to ensure they do not receive the professional development they need. This is done by
- Reminding the board that it has had professional development in the past and it does not need to repeat any of the topics as a refresher
- Convincing the board that it does not have the money to offer board professional development sessions
- Advising the board that there are much more important issues to take up their time and does it really want to put in more time in professional development sessions.
- Making the board feel that it is more important to keep the CEO content by doing things his way.
4. Ensure the board sets the Strategic Directions
The CEO, like any individual, is only one person and is not in a position to set the strategic directions for the board. He is responsible to bring vital information forward. The board is responsible for the strategic directions. It is vital to hear all voices during this debate.
5. Look for the ulterior motives of the CEO
It is possible for a CEO to focus on an area which reflects his area of expertise. If he had been the CFO he may focus on finances or if his area had been as in a program area, he may focus on programs. When that happens, the CEO will attempt to influence the board that it needs to give greater attention to this area.
Some boards fall into that trap. They give greater attention to one area, and when the CEO changes the board shifts its focus as well. The key is to leave management to the CEO and be firm that the board governs only.
6. Remove governance decision making from the CEO
The CEO may be in the room when the board is making decisions. This should not unduly influence the board. If it does, the board can use a secret ballot or ask the CEO to leave during the voting process.
7. Talk about the tension and refrain from giving in to the wishes of the CEO
Some CEOs have very strong personalities and are very temperamental. Therefore, it is critical that a board identify tensions early, refrain from ‘giving in’ just to keep the peace, and find a method to put the tension on the table. When the tension is addressed it is expected that all parties will respect the decisions and constructively move forward.
