Dynamics Between a Board of Directors and a CEO
Today, I’m going to talk about how to manage your board for CEOs. The dynamic between a CEO and the board is very interesting. Whether you’re in a private company or a public company, the CEO is beholden to the board. The board can hire and fire for that position, it’s one of their areas of responsibility. That creates an interesting dynamic, especially when things are not going as planned. I work a lot with CEOs on this dynamic, and I want to share some tips with you.
Keep Your Board Members Informed on Issues Emerging Inside of the Company
The first is to recognize that the board wants to know that the CEO is either performing against plan or is changing what needs to be changed in order to perform against plan. Let’s say that early indications are the company’s going to be behind on the revenue numbers for the quarter.
Well, the first thing the CEO needs to do is to understand what is going on that’s causing that to happen. What’s the cause of the slip that we’re starting to see? You might, as a CEO, need to work with your marketing team, or your sales team, or your product team to understand what are some of the things that are causing this slip. And before you go to the board, you want to understand that here’s the plan to address that concern.
So let’s say for example, the sales team just can’t hire enough people. And that’s one of the factors that’s causing revenue to slip. What you’re asking your VP of sales to do then, or your head of sales to do then is bring to you their recommendation on how do we address this. Then, once you understand what the problem is and what you’re going to do about it, it’s time to start communicating this information to the board.
If it’s early in the quarter, and you’re not going to have a board meeting for quite a while, call them up, say, “Hey, just want to give you a quick update. We’re seeing that revenue is slowing. We’re predicting we may not make the target for this quarter. We’ve done a causal analysis and we’ve come up with a plan on how to address that.”
That’s what a board member wants to hear. However, some CEOs deal with this issue differently. When in this example, revenue is slipping. They panic, and they start worrying. They may not know exactly why revenue is slipping, or they may have concerns about why we can’t hire people, and they know that that’s the reason, but they don’t know what to do about it. They don’t share that information with the board, and the problem can often get worse.
If the hiring problem, let’s say, that’s the cause of the issues doesn’t change, doesn’t magically go away. And all of a sudden the slip that might occur, the miss that might occur in making that revenue number gets bigger. And if the board members hear about this later in the quarter, or certainly not at the board meeting. That would be way too late. They’re going to be upset. They’re going to be upset for a few reasons. One, no one likes to get bad information late. If there’s bad information that needs to come out immediately, that’s uncomfortable for some CEOs to do. And yet it’s the right thing to do it’s what the board needs to know. And when you deliver that, you want to deliver it with confidence about your understanding of what you should do to address the issue.
Don’t Be Afraid to Ask Your Board Members for Their Insights
The second thing is the board wants to be helpful. The board has knowledge and experience and insight. And unless you, as a CEO are tapping that board for that knowledge and wisdom and insight, they’re being underutilized.
Some CEOs are worried about doing that. They believe that asking the board too many questions is a sign of weakness and they don’t want to look weak. In my experience, that’s not the case at all. As long as you present it in the right way, if you’re not exactly sure what to do about an issue, you still bring forth a hypothesis. You still tell them what you’re planning on doing.
But now you say to the board member, “I’d love to get your insight.” “I’d love to get your opinion.” “I’d love to get your thoughts, on my plan on how to address this.” That’s where the board member feels like, okay, I have the information I need. I understand you’re behind. And you’ve given me a sense of what the plan is. Now I can give you advice.
One of the things that is missed – a missed opportunity for a lot of CEOs is to tee up up the discussion with board members so that they’re willingly giving you advice. They’re not judging you rather, they’re looking at the business situation and providing you with insight and advice. Now, sometimes the idea that the CEO may come up with to address the challenge isn’t a very good one. It’s not a great solution. And that’s okay if you’re communicating it to the board member, if you’ve explained how you came to this conclusion and they suggest something different, you’re not going to get penalized for that.
If you gather enough information from the board members and you can execute against a slightly improved plan, it’s also true though. If you always bring, let’s call it bad ideas, to the board members that will reflect poorly on you, but that’s not what most CEOs do. They tend to avoid the conversation because they’re so worried about not bringing the perfect solution to the board.
My encouragement to CEOs is to look at the board as a set, as a group of people who have great wisdom, they have great insight. They have experience and knowledge that can be helpful to you in many, many situations. And it’s important to open those doors of communication and ask them ways that they can contribute to the success of the company because that’s where you are both mutually aligned.
Contact CEO Coach Glenn Gow Today!
My name is Glenn Gow, CEO Coach. I love coaching CEOs and want to help make you an even better CEO. Let’s decide if we are a fit for each other. Schedule a time to talk with me at calendly.com/glenngow. I look forward to speaking with you soon.
