Daring to Lead 2011: Board/CEO Partnerships

More than 3,000 executive directors participated in Daring to Lead 2011, the third in the series of national studies produced in partnership by CompassPoint and the Meyer Foundation.

The key finding that most startled me:  Though slowed by the recession, projected rates of executive turnover remain high and many boards of directors are under-prepared to select and support new leaders.

• Just 33% of executives were very confident that their boards will hire the right successor when they leave.  
• Forty five percent of executives did not have a performance evaluation last year; and only 32% of those who did said it was really useful.  
• Stunning to me is that 33% of current executives followed a leader who was fired or forced to resign.  
• Newer leaders reported that they were having a difficult time establishing effective partnerships with their boards, describing disillusionment with what boards contribute with respect to strategy, resources, and personal support.  
• Satisfaction with board performance was lowest among leaders on the job between one and three years.  

As the authors sadly report:  "It appears that many boards see executive transition as ending with the hire."

* Excerpted from Daring to Lead 2011

Effective governance is founded on ownership and partnership.  Those of us who serve on boards must strive to form a strong partnership with the chief executive, focusing both on a supportive relationship and accountability.  As a former CEO, I can guarantee that chief executives long for productive alliance with their boards--it can feel quite isolating at the top.

As board members, our first step is to make sure the board is living up to its responsibilities.  Is it leading the organization through effective governance and fulfilling its fiduciary responsibilities?  Is it collaborating with the CEO in strategic and generative thinking?  And most important, has the board clearly articulated--in writing--what it expects of the CEO?

Too often boards conduct the CEO evaluation at the end of the year with little forethought and planning.  And using 20/20 hindsight...  boards critique the CEO.  No wonder 33% lose their jobs!

An effective process is collaborative.  It is one in which the board and the CEO define expectations and success measures at the outset. Here are some simple tips to achieve a happier CEO/board partnership:

1. Begin with clearly articulating to the CEO her/his areas of responsibility.  Be specific, put it in the job description.  The CEO can contribute a lot to this conversation.  But, at the end of the day, it is the responsibility of the board to define.
2. Ask the CEO to describe his/her aspirations for each for each area of responsibility—i.e. what it looks like if s/he achieves all s/he hopes to achieve in this area this year.  Meet with the CEO to discuss them.
3. Ask the CEO to identify the key activities s/he will undertake to achieve those aspirations--and what s/he intends to achieve by taking those steps. In short, you are asking the CEO to tell you exactly what s/he will do and what success looks like.  
4. Take time to really listen and ask good questions.  It is important to do this early in the cycle, so that the conversation is aspirational and collaborative, and not defensive. The board should be thoughtful and supportive; but still be clear about what it views as success.  The primary motivation is that everyone wants the CEO to be successful.
5. The CEO should draft a work plan that includes areas of responsibility, aspirations, key activities, and success measures; and present it to the board for discussion.
6. Three to four times during the year, a committee should meet with the CEO to review progress on the plan.  Committee members need to be careful not to micromanage—but rather to ask good questions.  This discussion should allow for changes to all aspects of the plan that are reasonable.  Has the environment changed?  Have resources changed?  Have assumptions not held true?  All of these are good reasons to adjust expectations to reflect the current environment.  These discussions are also intended to make corrections.  If indeed the CEO just isn't following through on an area of responsibility, it’s the committee’s obligation to raise that issue and discuss with the CEO how it will be effectively addressed.

The result of this process is that the board and the CEO develop a collaborative partnership.  The board is well informed about the challenges facing the CEO and should be responsive as needed to support, mentor, and hold him/her accountable.  Another benefit, is that there are no year end surprises.  All of the issues of concern have been raised during the course of the year.  This process also gives the CEO control of his/her destiny.  S/he is a senior professional who should define his/her work plan and be accountable to the board for it.

As board members, we have an obligation to our CEO.  We should step up to the role as partner.

Jim