Building and Managing an Effective Relationship with Your Chair and Board of Directors
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I’ve never met a CEO who hasn’t discussed the relationship with their Chair and Board as either being a challenge, something they want to improve, or something that is deeply important and valuable. Changing roles to report to a new Board, or having new Directors join the Board are disruptive challenges that keep many a CEO awake at night.
Knowing how to build and manage a productive relationship with your Chair and board of directors is a crucial challenge that sits at the center of any CEO’s performance agenda. A successful partnership between a company’s leadership team and its board is essential to the long-term success of any business or organisation. However, given the wide range of skillsets, experiences, and expertise among board members, establishing trust and open communication from the get-go – while simultaneously managing their expectations – can be an uphill battle for any CEO. With so many factors at play in effectively managing your board partners, it’s important for CEOs to understand what it takes to build and manage effective relationships with your directors from day one.
Build a relationship with your board before becoming CEO
Depending on the size and scale of your organisation, there are a number of ways you can form relationships and bonds with members of your board before taking on the CEO role. In their 2019, study of 7800 CEOs across 24 industries, McKinsey & Company points out that board engagement and establishing relationships beyond meetings is a key practice among excellent leaders. If you are being groomed for a C-level role within the company, you may have the opportunity to get to know your board members as you progress through the ranks. This may include attending board meetings, joining the board of directors as “staff,” or sitting on the board while employed as an executive officer in another capacity. Regardless of how and when you initially form relationships with your board members, the time and effort you put into these bonds will have a lasting impact on your relationship once you become CEO. Board members appreciate leaders who take an active role in contributing to discussion, asking questions, and providing insight and perspective as they navigate important company decisions.
Understanding your Chair and board expectations are a key step in your onboarding
While the personalities and roles of each member of your board can vary widely, there are certain traits and expectations that are common to most boards. For example, most boards expect their Chair to establish and maintain strong relationships with the CEO, the CFO, and other key company stakeholders (e.g., investors, employees, and customers). They also expect their Chair to be a master of the board agenda, ensuring meetings are efficient and productive, and that all key topics are thoroughly covered. Finally, boards want their Chair to be an active listener who provides constructive feedback and ensures that all directors are engaged in decision-making processes. To effectively onboard as CEO, you’ll want to understand how your Chair is approaching these three roles within the boardroom. You can do this by having an open and honest discussion with your Chair about the way they see the board functioning, as well as where you can help strengthen the board’s activities and engagement levels.
Establish key metrics for measuring success
Effective CEOs and boards work together to establish clear metrics for measuring success. This includes both short-term and long-term goals, as well as metrics that track both financial and non-financial performance. While every company and organisation will have different goals, metrics, and achievements to track, there are a few that are almost always included. The first is financial performance, which is usually measured in terms of revenue and profit, but can also include metrics such as cash flow, return on investment, and net asset value. Next, many boards also establish key performance indicators for non-financial performance, such as customer satisfaction, employee engagement, and other operational metrics. For example, McKinsey & Company indicates that 55 percent of employee engagement is driven by non-financial recognition including feeling valued, which determine worker’s satisfaction and longevity in a role. By establishing these key metrics for success, both the CEO and the board can work together to track and evaluate progress over time. This can help to identify and address potential roadblocks, challenges, and issues early on.
Hold regular one-on-one meetings with your Chair to discuss deliverables, challenges, roadblocks and successes
Successful CEOs understand that one-on-one meetings with their board members serve an important function in managing their relationships with directors. For starters, these meetings provide an opportunity for the CEO to keep their directors up to date with the latest company developments. This includes information on company initiatives, strategies, plans, and anticipated results. In addition, these meetings also provide an opportunity for directors to provide feedback, pose questions, and seek clarification on topics and issues of interest or concern. Depending on the size and structure of your board, regular one-on-one meetings with each director can vary in terms of frequency and content. For example, smaller boards may meet less frequently than a larger board, whereas larger boards meeting once a month may be the norm. To manage these one-on-one meetings effectively, it’s important for CEOs to keep their directors informed about their schedules. This includes providing directors with a schedule of meetings and deadlines, as well as information on any external factors (e.g., press releases, investor meetings, or strategic partnerships) that may impact their availability.
Stay on top of the financial and operational details. Know your numbers.
As CEO, you must have a solid grasp of the financial and operational details of your business. This includes keeping up with monthly financial reports and metrics, as well as knowing your company’s key operational drivers and ratios. In fact, McKinsey & Company’s study of high performing CEOs indicates that when allocating resources within operations, 35 percent take a granular view, make comparisons using quantitative metrics, and understand when to stop funding. While some boards will expect the CEO to have a detailed understanding of each and every report, there may be others (e.g., your audit committee) that you want to stay informed about, but not necessarily have a deep understanding of.
Depending on the size of your company and its organisational structure, there are a number of ways to stay informed about key operational metrics. This can include attending operational meetings, asking your CFO to attend operational meetings, or consulting with your other executives to learn more about their respective departments.
Establish Clear Communication Protocols
There are many ways CEOs can strengthen their communication with directors and help them feel more engaged with company initiatives and decision-making processes. These include providing regular updates to individual directors, holding virtual or in-person board meetings, and engaging in regular board-CEO roundtable discussions.
Regular Updates: In addition to participating in regular one-on-one meetings with their directors, CEOs should also provide regular updates to the full board. This can include a variety of different formats, depending on the nature of the organisation. For example, for organisations that meet in person, this can include a verbal presentation. For organisations that conduct board meetings virtually, this can be an emailed update. Regardless of how you choose to present updates to the board, it’s important to present them on a regular basis (e.g., monthly).
Hold Regular Board Meetings: Depending on the size and organisational structure of your board, it may be beneficial to hold board meetings on a regular basis. This can be an in-person or virtual meeting and varies greatly from organisation to organisation. For example, a large board that includes directors from different regions may decide to hold quarterly board meetings. A smaller board may choose to meet on a monthly or bi-weekly basis. Regardless of how often you hold board meetings, it’s important to ensure that these meetings are efficient and result in meaningful dialogue and decision-making.
Hold Regular Board-CEO Roundtable Discussions: In addition to holding regular board meetings, many CEOs also engage in regular roundtable discussions with their directors. These one-on-one discussions allow CEOs to keep their directors engaged by receiving feedback, posing questions, and providing regular updates on company initiatives and results.
Building and managing an effective relationship with your Chair and board of directors is a crucial challenge that sits at the center of any CEO’s performance agenda. A successful partnership between a company’s leadership team and its board is essential to the long-term success of any business or organisation. With so many factors at play in effectively managing your board partners, it’s important for CEOs to understand what it takes to build and manage effective relationships with their directors from day one. Seeking and giving feedback is crucial to preventing misunderstandings or cross purpose agendas.
Importantly, CEOs can benefit from reminding their Boards that culture starts in the Board room so their behaviour, conduct, values and messaging can have an incredibly positive or disappointingly detrimental effect at all levels and across all aspects of an organisation. This can be challenging to manage when it goes awry – and this is where a great independent mentor and coach is vital – but more on that later!
Natasha Olsson-Seeto is Chief Executive and a Director on the OnTalent Board. Natasha is also on the National Board and elected past Chair – Recruitment and Consultants Services Association (RCSA) in Queensland, Non-Executive Director and Chair of the People, Performance and Culture Committee of Food Bank Queensland and Ambassador of the Brisbane Club.
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