Chapter 3 of the ZimCode addresses the Board of Directors and Directors, and sections 119 (g, l, s); 120 (k) and 123 up to 130 outlines the working relationship between the Board Chair and CEO.
In simple terms the CEO manages the operations of the company and the Board Chair oversees management. The company benefits more when there is twice as much talent at the top, each playing a distinct leadership role, and supporting each other.
For this relationship to work well, it must be centred on negotiation, consideration and understanding of the role and perspective of the other. There must also be a recognition that the CEO and the board play separate and distinguishable roles, but must work together in order to achieve organisational goals.
The assumption is that both the Chair and the CEO have what it takes to perform the role well and that they are both ready to invest in making the relationship work. A strong partnership between the Board Chair and the CEO is a crucial element in a profitable relationship. Such a relationship can help an organisation execute its strategy more effectively, successfully navigate a crisis and resolve any other multitude of issues that an organisation and its Board will encounter. It is important that the CEO and the board are as allies, who play roles, which are essential to achieving the common organisational purpose.
This interdependent relationship of equals is quite unique as both people have attained these positions because they have credible experience and are perceived as leaders, as supported by sections 112 and 126 of the ZimCode.
This relationship calls for mutual trust and respect. Each must recognize the strength in another and utilise them for the benefit of the company. This has to be a deliberate action from both sides and it sets the groundwork for an effective working relationship.
The relationship between the chair and CEO is always under threat if the chair is too weak or too dominant. Having a chair who was once a strong CEO has the temptation to meddle in the day to day operations of the company yet the ZimCode recommends that the Board Chair should stay away from operational issues. This usually results in confrontations and public disputes which is not healthy for the organization. The issue of role clarity as highlighted in sections 114-120 of the ZimCode need not be ignored.
The CEO needs to accept that disagreements with the chair are likely to arise and these moments shouldn’t be avoided. The tendency to underplay bad news, selectively present information or fail to raise important issues to avoid rocking the boat with the chair may work in the short run. In the long run it undermines the confidence that the chair and CEO must have in each other. Yet the success of their relationship is based on trust.
Passive and weak chairpersons can be equally dangerous. A weak chair has the potential to hoodwink the shareholders into thinking they have an independent structure, when it is the CEO who has too much authority and running the show. While a weak chair can seem to make the life of a CEO easier, in the end it leaves the CEO more vulnerable and fire fighting all the time. This takes away productive time and makes decisions more difficult to reach which is not good for the company.
An effective chairperson ensures that together with the CEO they create a shared view of what they want to accomplish and the strategy they will use to meet these goals. It ensures that assumptions are cleared and opens lines of communication which enables them to get things done faster. They should go a step further beyond agreeing on official company values and standards, and discuss how their personal values and ethics will shape how they lead the company and respond to potential crises.
The chair has to take time to appreciate that the CEO accommodates the different working styles of the Board Chairs who take the position and has to constantly develop ways of making the relationship work. It can be frustrating having to re-adjust working arrangements every few years to accommodate a new chair.
It is also frustrating to work for too long with a challenging Chair or to have a series of board chairs who are imposed to the service whether they show talent or not. Therefore, the chair cannot expect to instantly become a mentor to a near stranger, the CEO, who has had various experiences with other Board Chairs. As the ZimCode advices the Chair to provide guidance to the CEO it is worth noting that this coaching relationship can only fully develop as comfort and trust levels rise.
When the level of collegiality between the CEO and chair is no longer ethical it calls for action from the rest of the board. This usually happens when the chair and CEO become ‘buddies’ such that there is no longer a healthy boundary in the way they deliver company business.
It creates room for the chair to constantly cover for the CEO’s professional shortfalls, create an inner circle where decisions are made prior to board meetings and allow illicit financial transactions to take place without going through the board.
The board should be wary against such tendencies and deal with them head on. A healthy and efficient relationship between the CEO and the board chair is essential to successfully achieve organisational goals. A strong, productive relationship will support improved corporate performance.
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