The pandemic has seen boards re-write business plans, challenge assumptions, change views on risk, rewards and opportunities. They have had to, as they arguably face the worst global economic conditions since World War Two.
While some boards are excited by and are embracing the task in hand, others are not. For a considerable number of directors the quiet, cosy pre-retirement plan they anticipated has gone out of the window. Now they face a riskier and more demanding role.
The really good boards understand their role and have high performing CEO’s and management teams. At these organisations the boards have quite rightly avoided getting embroiled in operational issues. Instead they have taken the opportunity created by COVID to focus on strategy and risk, while assisting their CEOs with wise counsel and support.
Boards must have confidence that their CEO can understand, respond and lead against a backdrop of increased uncertainty, different opportunities, disruptive events and new technology. As a result, CEOs are under even more scrutiny, as boards devise a strategy to gain the best return from the risk being taken with the company’s capital. Expect CEO turnover rates to increase, as they did prior to the pandemic. PWC’s 2018 CEO Success Study revealed that “turnover among CEOs at the world’s 2,500 largest companies soared to a record 17.5% in 2018.”
Therefore, it’s vital that CEOs build a strong and healthy relationship with their board so they can manage the directors during turbulent times, to achieve alignment and success.
There are five ways CEOs can deliver this:
- Have clear expectations
Trust and respect are as the heart of the relationship between the board and the CEO. Take the time to talk with the board to ensure that you and your board have the same expectations. Agree on what success and good performance looks like. Recognise that clear, mutually agreed expectations between board and CEO are a recipe for success, just as assumptions and guesswork may lead to disaster.
- No surprises
There is no place for surprises in the boardroom, let alone in an effective relationship between the board and the CEO. Surprises should be left to infatuated lovers and children. CEOs must be accountable for working this way and hold their board accountable for reciprocating that trust.
- Ask and field tough questions
All assumptions need to be challenged in a fast-changing world. This requires the asking of tough questions about the business, its strategy and performance. CEOs need to be the leading the way here. Those that aren’t demonstrating leadership by asking those hard-hitting questions of the organisation should fully expect the board to be asking them, and questioning their leadership.
- Gain the trust of the people
Our initial response to the COVID crisis was around the safety of our staff, customers and stakeholders. This has now broadened beyond physical wellbeing to address the negative impact that this crisis is having on the mental health and wellbeing of our people. This is a key part of our culture and ensures we deliver trust with everybody we work with. Like us, some enlightened CEOs have demonstrated that they are guiding lights when it comes to their people at this time. However, some are destroying trust with the way they respond to COVID and work with their people. CEOs must generate confidence and credibility with the board, to communicate that their team has the bench strength to win in a world of different opportunities. This means CEOs engendering honesty and openness through clear and regular communications with the board to deliver trust. Too many mistakes made at this time will have a negative impact on the culture of organisations, trust in boards and the CEO.
The often used term in the corporate world of needing to move fast and break things has never been more important. In order to adapt and respond to a health and economic shock the pace of innovation by organisations needs to be fast. Those CEOs who have been successful have demonstrated a willingness to cut through inertia and make changes that will enable their businesses to move from survival mode to thrive in a different world. To achieve this it’s vital to look at what’s working well and what isn’t. Then CEOs must ensure the board is on the journey with them. This will enable changes to people, processes, tools and technology which will help the organisation to thrive under their leadership.