How can CEOs increase the quality of their relationships with their boards? They must remember that successful CEO-board partnerships revolve around a few key dynamics: trust, communication and alignment on strategy and pace of change. In fact, we asked more than 120 board directors of mid-sized companies across industries what makes CEO-board relationships tick, and 89.2% agreed that effective partnerships are based on high levels of trust.
Trust is intangible and there aren’t many specific or easy steps one can take to build it. Nevertheless, steadfast CEOs move toward it effectively. Successful CEOs and boards will work together to anticipate where their relationship may hit a rough patch or go off-track and agree on steps they will take together to address such an issue if it arose. Also, when the CEO actively keeps the board abreast of developments in the business, a more trusting and cooperative environment develops naturally.
Effective partnership between a board and a CEO also depends on consistent communication. They should discuss and reach agreement on objectives, performance expectations and business priorities—so the company’s leaders are all looking in the same direction.
Open and regular communication is the oil that goes between the gears and allows for effective problem-solving. In addition to formal, robust strategy discussions and performance reviews between the CEO and the board, the CEO should look for opportunities to pick up the phone for regular check-ins with the board chair or select members. Accordingly, lunch meetings, small talk and impromptu calls also pay off.
The experience of Steelcase, the publicly traded furniture company based in Michigan, brings to light the dynamics it takes to get this relationship right. Steelcase underwent a CEO succession two years ago, and incoming CEO Jim Keane took steps to ensure a positive and continually productive relationship with his board.
First, he invested time to get the relationship off on the right foot, meeting with the chairman and other board members to get to know them and discuss the future of the company. Keane also sought their input on business matters, both during and after his transition into the CEO role.
At one point, when he was in the process of assigning people to different roles in Asia, Europe and elsewhere, he decided to get the perspective of the board chairman first—rather than make the assignments and later inform the board, which would have been within his rights.
“Including the board in the decision-making process creates a collaborative environment,” says Guy Beaudin, an RHR International senior partner who has worked closely with Steelcase. “A key reason that Jim’s relationship with his board has been so successful is that they established explicit roles and expectations on both sides of the equation.”
Keane himself agrees. “There is a lot of gray area regarding the responsibilities of the board and of management. Having an ongoing dialogue that defines those roles is critical for building a successful CEO-board relationship,” he says.
When trust, communication and alignment on strategy and pace of change exist simultaneously between the CEO and board, CEOs can do something they almost never get to do on a day-to-day basis: be vulnerable, brainstorm and truly partner with their boards. In the life of a company and CEO, such moments can be invaluable.