An effective board is a vital piece of any successful business, and choosing the right members is vital to an effective board. So, should the CEO be one of these members?
Since there are benefits and impairments that come with the CEO-as-board-member arrangement, the real question is: Can we have the benefits without the impairment? The answer is yes. Now here's how to avoid the downside.
The Good and the Bad
Pros of having the CEO/executive director on the board:
- All parties are informed and the board has the most current data when deliberating or debating options
- There is better organizational alignment: The CEO is better able to represent the will of the board
- CEO/executive director relationship: There is generally a better working relationship when the board includes the executive in its work, demonstrating respect for his/her role
Cons of having the CEO/executive director on the board:
- The passive board: The CEO ends up driving the bus
- Some boards (and CEOs) have the mistaken impression that the CEO is driving the bus. Yes, this person is critical to the organization, but if the CEO is driving the bus, why have a board? The combination of a strong CEO and a strong board is far superior to a strong CEO with a weak board.
- The board co-manages or become passive
- A board that does not understand their responsibility will tend to become either a passive board or a board that insists on co-managing with the CEO.
- The staff-driven agenda
- The agenda is the focal point of board business — and board business is different than staff business.
How to Capture the Pros and Avoid the Cons
Here’s the headline: It is preferable to have the CEO/ED as a full part of board, but without a vote. In order to accomplish this without detriment, the board needs to adopt the following values and practices:
- The board must establish and clarify the fundamental, state-mandated power relationship
- Invest the board with 100 percent of organizational authority, keeping in mind it may delegate authority at will
- The board is 100 percent responsible to govern on behalf of people who, for the most part, are not at the board table (this is not true for the CEO, who is accountable to the board).
The board fulfills these requirements by taking ownership of organizational responsibility. Then, and only then, can the board delegate operational authority to the CEO/ED, creating two highly empowered lanes — one for oversight owned by the board, and one for executive function owned by the CEO/ED. As long as these distinctions remain, the board can avail themselves of CEO insights and experience at board meetings.
Should the CEO have voting authority? Logic says no. Because the CEO is the direct report of the board and is accountable to the board, it would be a lane violation for the CEO to have the same power as the board.
The presence of the executive on a board can produce excellent results, but only when we take the possibilities, both good and bad, into account. Take care to institute these principals with thought and intention, and enjoy the benefits a stronger, more effective board can have on your mission.
About the Author
Randal is a results-driven, development and execution-oriented leader with more than 25 years of experience leading high performance teams. He’s a proven business professional, capable of leading change in both the boardroom and on the frontline, with a strong track record leading strategy development, entrepreneurship, performance and evaluation globally across a variety of social enterprises and functions.
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