Why Boards That Lead Succeed

Early Detection is Key

Even the best of boards can misfire on CEO selection. That’s why another critical skill is the ability to catch a falling CEO before he or she hits the ground with a thud. True leadership at the top requires directors to trust their instincts and act quickly on troubling news even if their concerns ultimately prove to be false warnings. A candid, data-seeking, and truth-telling role is critical for the board to meet its own leadership responsibilities.

To ensure that the board catches problems early, it is useful for directors to keep a weather eye on early signs of executive deficits, such as:

  1. Lack of clear strategy. Chief executives who do not return straight answers to the board when questioned on strategic direction—or who release bad news only at the eleventh hour—are among the more telling signs of strategic ambiguity.
  2. Failure to execute. The fault is usually the result of a combination of several troublesome habits: a) a lack of clear focus on a few dominant priorities, favoring instead an idea du jour or a long menu of initiatives that distracts from what really needs to be done; b) a dislike of follow-through, characterized by the CEO’s failure to ensure a change in strategy is carried out by direct reports and; c) underanticipation of unintended consequences, which essentially means the CEO is too often caught off guard.
  3. Wrong people calls. When a CEO seems to be overly reliant on the decision-making of a senior officer, or becomes captive to one or more special advisers who filter the upward flow of diverse views, that’s a sign of weakness in this area. Another red flag is when a CEO decides to elevate a functional executive with little line experience into a major line position.

A board that leads, in a proactive, thoughtful way, will have a chance to act before the company flies too far off course—whether that means helping the CEO to right the ship, or replacing him or her. And that same board is far more likely to select the right person for the job to begin with.

 

Ram Charan

The author of several books, including Execution and Global Tilt, Ram Charan taught at Harvard Business School and the Kellogg School at Northwestern University before becoming a consultant, strategic advisor and executive coach.

 

Michael Useem, Photo by Tommy Leonardi

Michael Useem, is Professor of Management and Director of the Center for Leadership and Change, Wharton School, University of Pennsylvania, where he offers courses on leadership and governance. He is co-author of Boards That Lead: When to Take Charge, When to Partner, and When to Stay Out of the Way (HBR Press, 2014).

Dennis Carey

Dennis Carey is Vice Chairman of Korn/Ferry International and specializes in the recruitment of CEOs and corporate directors. He is co-author of Boards That Lead: When to Take Charge, When to Partner, and When to Stay Out of the Way (HBR Press, 2014).