“The two key assets of any organisation are the Board and the CEO. These two key assets need to be nurtured to ensure the right skills mix for now and the future, selecting and electing the people capable of being leaders, and monitoring and performance managing to unlock the wisdom and skills of these two key assets,” says Steven Bowman, Managing Director of Conscious Governance.
When it comes to relationships at work, one of the most critical dynamics is between the CEO and the Chair. If the relationship between the two parties is either too close or too combative, all the other board functions can be under threat, and future implications for the entire organisation can be painful. Therefore, finding the correct balance in the relationship is key to the successful function of the Board as well as the entire organisation.
In this article, we explore the nature of the relationship between both parties and what makes the ideal rapport.
The CEO is in charge of managing the overall operations of a company. They occupy the highest position in the company, and the Board of directors likely elects their position. The CEO’s job includes but is not limited to delegating and directing agendas, managing the company’s organisational structure and driving profitability.
The main role of the Chair is to ensure that the Board is running smoothly, effectively setting and implementing the company’s strategy. These individuals are the company’s leading representatives and uphold the mission, vision and core values. They are also responsible for taking the lead in board meetings and facilitating the directors’ communication.
Why is the relationship important?
“A high performing Board and CEO are an unstoppable combination. A high performing Board will ensure it and the CEO continue to be high performing. A high performing CEO will ensure their executive team is high performing. The Chair position is often the lynchpin that translates, focuses and enables the relationship between the CEO and the Board,” explains Bowman.
The Chair and CEO relationship consist of an interdependent coexistence of two top positions in the organisation. For example, whilst the CEO manages the organisation's operations, the Chair exerts control over the finances that the CEO functions with. On the other hand, the CEO controls the workforce and resources and therefore influences the Chair’s workload and external reputation. The two must work together for the benefit of the company.
The consequences of the relationship being imbalanced
When the relationship is too close
It is recommended that firstly, the CEO does not act as Chair. Combining both roles gives the individual too much power in the company. On top of that, it means that the CEO is voting on his own performance. This risks the company’s objectivity. Having a combined role of CEO and Chair also risks other members of the Board not having enough of a voice, and, in the long run, this imbalance may cause destruction to the company and shareholder value.
One of the many reasons for having a board is the ability to hold accountability. If the CEO and Chair are too close, there's a risk that the CEO might not be held accountable. There might also be the question of tension during the working relationship, where the Chair might not feel comfortable enough to objectively comment or criticise the work of the CEO without it seeming like a conflict of interest. And again, as a result of this, the organisation suffers.
When the relationship is too distant
Since the relationship between both parties is so intertwined, a distance relationship between the two causes strain and unnecessary workload. As mentioned, the CEO controls the workforce, whilst the Chair influences the company strategy under which the CEO functions. Without an understanding of each other’s position and a vivid picture of the organisation, miscommunication between the two can be detrimental.
What’s the ideal situation?
- Mutual respect for one another
Ideally, the relationship between the CEO and the Chair is of mutual respect and trust. There must be clear communication between the two, where the CEO must feel like they can share ideas and concerns about the organisation with the Chair.
While each position is senior, not everyone has the same working style. Having patience, empathy, compassion, and objectivity will greatly help the relationship between the CEO and the Chair.
- Shared context of the organisation
If there are strains in the relationship, this could suggest that both members work from different contexts.
The CEO might be working to achieve one goal, whilst the Chair feels oblivious to why they are doing so. Both have good intentions for the organisation. However, they do not align. There must be an effort put in place to understand where both parties are coming from. Communication should be the starting point where both should align their views on strategic intent, the company and what it stands for, the external environment in which the company is operating and finally, any agreements for the future of the company. Sometimes it is simply the untangling of a knot that can bring clarity and smoothness to the working relationship.
- Clear values and ethical standards
Different talents and perspectives are normally celebrated amongst board members. It can be a huge forte to have different people with different ideas coming together for the company's good. The Chair and CEO must agree on their common goal – the betterness of the organisation. It is recommended that the CEO and Chair discuss in depth how their personal values will shape how they lead the company and handle possible risks.
- Clearcut role clarity
The last and final point is ensuring that the CEO and Chair know exactly what their roles in the company are. Neither one should intrude on the other’s position or micromanage the other. Clear communication and a structured process for the two positions in learning and agreeing on how to work together are vital to the organisation.
“The relationship between the Chair and the CEO should always be one of ‘No surprises’,” adds Bowman. “This means regular contact, fearless conversations, ‘heads-up’ to emerging issues, and testing of ideas and strategies between the two to ensure the ongoing high performance of the organisation.
The Chair owns the Board agenda and manages the work of the Board through Board meetings and interpersonal interactions. The CEO most often orchestrates the material being provided to the Board. If the Board is unclear regarding its requirements, it is up to the Chair and CEO to clarify, focus and provide the material the Board requires to make the decisions that need to be made. The Chair provides insight to the CEO, the CEO provides insight to the Chair.”
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