HR PERSPECTIVE: Unpacking the board of directors, CEO relations
A good working relationship between the CEO and the Board, is a must if the organsiation has to be successful. In the majority of cases where the relationship is sour, organisational performance suffers.
Board members need to respect the CEO and the CEO and their executive team need to respect the Board members. The relationship should never be that of a boss-subordinate.
What is important to remember is the relationship must remain professional. Being professional also means holding each other accountable for the things each side commit to do for the organisation.
The conflict that normally arises between the CEO and Board members can emanate from each side not knowing their roles.
The Board must acknowledge that all management operational decisions are a preserve of the CEO. On strategic issues the CEO must work together with the Board Chair and the Board members as constituted in Board committees.
Role clarity for each side is the first step in establishing a harmonious working relationship between the two sides.
The aim of this particular research was to understand the relations between executive management and board members.
In a survey of 29 organisations this is what we found with regards to the relationship between the Board and executive management.
a Most the participants (73.1 percent) believe their Board has a full range of skills required to lead the business effectively.
a A majority of the participants (87.2 percent) said their Board is of right size while 12.8 percent said their Board is not the right size.
a A majority of the participants (63.2 percent) said their Board has a enough independent directors to ensure checks and balances while 36.8 percent said their Board does not have enough independent directors to perform checks and balances.
a Most of the participants (58.2 percent) said their Board does not micro-manage executive management while 41.8 percent said their Board micro-manages executive management.
a A majority of the participants (90.7 percent) are sure that there is a good and professional relationship between their CEO and the Board and 9.3 percent said there is no good and professional relationship between their CEO and Board.
a A majority of the participants (90.4 percent) said their chairperson is competent and leads the Board with distinction and 9.6 percent said their Chairperson is not competent.
a Most of the participants (38.6 percent) believe the performance of the Human Resources/ Remuneration Committee needs improvement, 35.7 percent said it is satisfactory, 21.4 percent said it is well run and 4.3 percent said it is unacceptable.
a Most of the participants (45.8 percent) believe the performance of the Audit & Finance Committee is satisfactory, 27.8 percent said it is well run and 26.4 percent said it needs improvement.
a Most of the participants (45.6 percent) said they do not have a Loans Committee, 24.1 percent believe the performance of the Loans Committee is satisfactory, 13.9 percent said it is well run and 16.5 percent said it needs improvement.
a Most of the participants (84.5 percent) said their Boards are made up of people of high integrity while 15.5 percent said the Boards lacked people of high integrity.
a A majority of the participants believe that their Board members are not just after fees and 12.9 percent of the participants said their Board members are just after board fees.
a Most of the participants (74.6 percent) said their Board practices high levels of corporate governance and 25.4 percent said they do not practice high levels of corporate governance.
The above findings highlights to the need for a very good professional relationship between executive management and the Board.
Board members and senior management must strive to build a good professional relationship for the benefit of the organisation.
Nguwi is the managing consultant of Industrial Psychology Consultants (Pvt) Ltd. He writes in his personal capacity.