The relationship between a Board and a CEO can be extremely powerful. When a Board is on its ‘A-game’, the results are obvious. The combination of experience, insight and sound direction that a capable Board brings to the table is a dynamic mix that leaves leaders feeling reassured and empowered to lead.
However, the unfortunate reality is that across some organizations, the relationship between leaders and Boards is dysfunctional. This can mean strained relationships, delays in important initiatives, and the creation of a toxic environment where ultimately the organization suffers the most. Depending what side of the equation you fall on, it may be the Board that has issues, or it could be a sign that there needs to be a change in leadership.
In most instances this dysfunction manifests itself in other forms that are not as obvious. Failing to quickly identify and handle the signs of a dysfunctional relationship will only worsen the impact on the organization. But fear not, there are a several best-practices CEOs and Boards should leverage to develop a healthy working relationship.
Signs of a Dysfunctional Board/Leader Relationship and How to Solve It:
1. Unrealistic Requests
Often when a Board is overly demanding of a leader it is a sign of a lack of trust. Have they requested 100 pages of financial analysis? Then they may not have a lot of confidence in the financial reports and may be over compensating. Unfortunately, this can put a lot of strain on the organization in terms of time, effort and stress.
Solution: Get Clarity on the Quantity & Quality of Information the Board Prefers and Then Negotiate.
A new Board may ask for more information at the beginning. Leaders should continue to challenge the amount of information really required by the Board and adjust the template as members get more comfortable. If unrealistic requests are coming through, try to get to the root cause. Is the Board uncomfortable with the way the reports are done, the competency of key staff members, etc.? It is better to get this information up front, as opposed to letting it develop into a much larger problem
2. Operational Interventions
The saying goes: Boards should have heads in and hands out. Not enough Board members understand this important distinction and get involved in management and operational issues. Sometimes this happens because they are trying to compensate for a gap in leadership. Sometimes this happens because the Board members are used to running organizations themselves. Whatever the case, it’s not an appropriate role for a Board.
Solution: Set Boundaries
Make it clear where the line is between operational and strategic issues. In some cases, leaders can use an actual line in reports and plans where the Board focus should be versus the management team. Once it has been established and agreed upon, leaders and Boards can stay on side by continuing to have clear agenda items and documentation that reinforces the distinction. It requires discipline and consistency to maintain these important boundaries, but will avoid bigger issues down the road.
3. Difficult Decision-making and Inappropriate Communication
If the Board is constantly changing directions causing organizational churn or if it takes them forever to make a decision, it can put strain on a leader’s ability to get things done. This could be a result of inexperience at the Board level, or perhaps issues at the senior level. Not having clear or timely decisions from the Board slows leaders down, not to mention increasing frustration and strain on their relationship.
These difficulties can be compounded if there are blurred lines of communication. Is the Board finding out internal information before leaders have had a chance to properly brief them? Do Board members pick up the phone and call junior staff members to find out what’s going on? This type of communication can negatively impact the relationship between Board members and senior staff. Leadership will be on the defensive and Boards may get bogged down in hearsay and gossip, leading to dangerous or unfounded conclusions.
Solution: Get Consensus on Communication Do’s and Don’ts
As soon as possible, leaders and Boards need to establish the ground rules in order to agree on the acceptable and unacceptable behaviours for both parties. When inappropriate breaches are made the issue needs to be brought forward; the ground rules reviewed, and appropriate methods of communication reconfirmed. Over time, incidents will decrease when the leaders and Board members know they will be held accountable for their actions in a peer environment.
4. Power Struggles & High Turnover
In some instances, the Board may spend more time infighting than helping the organization. Some people join a Board for self-interest and are less interested in the organization then they are in their Board influence and power. A sure sign is turnover – if members start dropping like flies, it is usually a good indication that something is amiss.
Solution: Make Sure There is a Strong Chair and Nominating / Recruiting Committee
An experienced Board chair can make all the difference. They can expedite decision-making by using governance structure, discipline and their strong personality. They can be a CEO’s biggest ally.
The strength of a Board is based on the strength of the individual members who are recruited by the existing Board. Leadership should work with their Boards to have the appropriate governance that focuses on building a pipeline, recruiting and exercising due diligence throughout the recruiting process.
A dysfunctional relationship will always spell trouble for an organization, but through swift intervention and preventative measures, both parties will be better equipped to mitigate any negative effects. Establishing a healthy relationship at the onset will help to avoid these issues, but these same steps can also help to set a corrective course of action to get things back on track. If problems still persist, it is worth considering the need for governance training and education to get on the same page in regards to the purpose and role that each group plays. Review the options and keep in mind the time, effort and money that is invested in the relationship can pay off big dividends for the organization.