Why CEOs make good chairpersons


A board chairman should lead by example and drive the company towards a future that not only benefits shareholders but also contributes positively to the wider society. FILE PHOTO | SHUTTERSTOCK

A recruiter said to a candidate, "In this job, we need someone who is responsible.” The job applicant replied, "I am the one you want. In my last job, every time anything went wrong, they said I was responsible."

The chief executive officer (CEO) of any organisation is the ultimate individual responsible for the delivery of the organisation’s mandate.

They “execute” the mandate given by the organisation’s board. The board, in turn, is given their mandate to oversee this execution by the owners who might be shareholders, donors or members depending on the type of organisation. The word executive as an adjective is defined as “relating to or having the power to put plans or actions into effect.”

Having done this over several years, including reporting to a board that may or may not be supportive, a CEO has both managed people downwards in the form of subordinates and managed people upwards in the form of their board.

The former is easier, as being the top dog, the CEO can be directive in his approach as he has to be in control of the business.

The latter is harder, as the CEO has to be more collaborative in engaging the board as his primary performance and evaluation stakeholder.

His role is to ensure that the organisation’s performance relating to strategy execution, financial performance and risk management is humming at top-notch so that board members feel that the right person is in control.

Board engagement becomes easier and, ideally, the board will stick to doing what it is supposed to do: “nose in, fingers out.”

However, if performance is going south, or cracks are beginning to show in the management team, then board interference in the running of the organisation is a clear and present danger.

The board begins to tell management what to do and how to do it, adopting a “nose in, fingers in” approach that can be dangerous as the CEO is the principal accounting officer.

The board will happily wash its hands of a bad decision in such cases, saying it was the CEO who undertook an action, rather than take ownership of any interference that generated a bad outcome.

It, therefore, becomes necessary to have a sober, mature and very experienced board chairperson who knows where to draw the line between oversight and execution.

The board chair plays a critical role in ensuring board informational needs are met while protecting management from board extremisms such as interference with the day-to-day running of the organisation.

Which is why when looking for a board chairperson, it is imperative that the owners of organisations seek an individual who has led an institution as a CEO, preferably an institution with a board so that the individual has had the experience of being overseen and being answerable to a group.

This individual has experienced collaboration and partnership where they have had a good board and, on the flip side, has experienced interference and dysfunction where they have had a bad board.

Such a chairperson knows the dangers of allowing too much board interference and should be amenable to exhortations from the CEO to rein in a rogue director who is giving directions to management outside of the board governance framework.

This chairperson should know when the CEO needs a little bit more heat under his seat when performance is deteriorating and how that heat should be applied effectively without capping his knees.

This chairperson should know that management appreciates hearing different perspectives from around the table and should facilitate cogent and vibrant board discussions that draw out varying views from even the quietest of board members.

The experienced CEO, as chair, knows the danger of an overbearing chairperson who can dictate the board agenda to the singular exclusion of all other board members.

And therein lies the challenge. The chairperson, formerly known as a CEO, may also suffer major post-traumatic stress disorder (PTSD) from the experience of their last overbearing chairperson.

Consequently, they could adopt the same behaviour, as that is the only path to leadership redemption that they have ever known.

In some cases, such a chairperson might actually want to run the organisation themselves, creating the classic case of the de facto executive chairperson. In that case, just like today’s opening anecdote above, they are always responsible!

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