A fruitful CEO/board relationship can be the foundation for success and stability, whatever the economy throws at you. But the opposite can also be true. Without a supportive partnership between the CEO and their board, crucial decisions can be delayed, watered down or denied, expertise wasted, and the health of the business put at risk.
For new CEOs, the first year of their tenure can be make or break when it comes to building that relationship with the board. However, understanding the board’s culture, its approach to decision-making and its willingness to collaborate on different management styles can prove challenging.
That’s why establishing some frameworks upfront and working through important relationship-building tasks should be a priority.
In a recent M&A Community webinar, Beyond Governance: Optimizing the Board–CEO Relationship, Beverly Behan, an experienced board consultant with over 200 global clients, shared helpful tips for new CEOs that could help them build strong and collaborative ties with their boards.
Changing archetypes
Board dynamics have changed significantly in recent decades, Behan revealed. Their approach typically boils down to five board ‘archetypes’, which demonstrate how board behavior has shifted from a passive style to latterly, more active oversight:
- Country club board: A passive, ceremonial board where board service is treated as a reward and directors are often friends of the CEO.
- Reporting-out board: Focused on formal oversight and accountability, with an emphasis on management reports which the board questions with limited dialogue.
- Collaborative oversight board: Blends oversight with strategic partnership, so that the board serves as both a sounding board and a watchdog. Dialogue is constructive.
- Micromanagement board: Interferes in day-to-day management decisions, typically after losing trust in the CEO and/or management. Controlling and frustrating for executives.
- Hands-on board: Board functions as a quasi-management team and plays an active operational role. Common in early-stage companies but problematic when the founder steps back.
Behan suggested that, in the late 1990s, many boards were largely decorative, “like the hood ornament on a Jaguar”. Then, after Enron, boards moved to a “reporting-out” model, demanding more oversight and questioning management. While this increased accountability, it often led to performative interactions and less collaboration.
The Collaborative Oversight archetype is where true value lies, with CEOs benefitting from a board made up of a diverse set of backgrounds.
“Directors aren’t just watchdogs; they bring real-world experience to the table and help CEOs think more strategically. Most CEOs get the greatest value from their boards when they use them as sounding boards on critical issues and tap into their expertise,” Behan advised.
To evolve the board/management relationship to a more Collaborative operating mode, it’s not just down to the board to change their worldview. CEOs need to take an active role in making sure the relationship gets off on the right foot.
Five rules for CEOs to build and maintain great board relationships
After working with the boards of hundreds of global companies, Behan has developed five rules that help maintain good board-CEO relationships:
- Don’t surprise the board: Keep the board informed—especially on material issues. They should never learn key information from the media before hearing it from you.
- Treat the board as an asset: Approach the board as a strategic partner, not a hurdle. Set a high bar for board excellence and involve board leadership in that vision.
- Listen—but don’t be a pushover: Engage in real dialogue. Take feedback seriously without being defensive and assertively push back when needed. Balanced exchange earns respect.
- Be transparent about problems: Share potential risks or issues early, along with your plan to address them. This builds trust and credibility.
- Leverage the board’s experience: Tap into the expertise around the table—during and outside of formal meetings. Directors often want to contribute more strategically and can do so in constructive ways that don’t usurp management’s decision making.
One of the toughest transitions for new CEOs is realizing that they’re no longer reporting to a “boss” but to a group, the Board of Directors. While the CEO’s relationship with their Chair or Lead Director is critical, it’s not exclusive; CEOs need to invest the time and effort to build and maintain constructive relationships with all of their directors.
While some CEOs see their board as a “nuisance” – a compliance hurdle or critic – savvy CEOs see their board as an asset.
Behan gave an illustration of a Silicon Valley CEO who viewed the board as an asset right from the start. His attitude set the whole board/management relationship for success. “He actively sought their input and built a culture of trust. As a result, that board performed exceptionally well. Moreover, several top executives at the company described working with the board as some of the best professional experience they got in their jobs,” she said.
This shift improves board engagement, fosters trust, and enhances dialogue and decision-making.
The first year matters: A checklist for new CEOs
The first year is crucial for new CEOs to establish their board relationship. Here are Behan’s five vital tasks that CEOs should tick off in that vital 12 months:
- Define your ideal relationship with the board: “Don’t just inherit your predecessor’s dynamic.” New CEOs should consciously consider how they want to engage with the board and, where appropriate, intentionally shift the tone. This is nearly always the case if the prior CEO was terminated or had been in place for a very long time such that the board/management relationship may be acrimonious or outdated.
- Meet one-on-one with each director: She recommends in-depth conversations with each director in the first six months to set expectations and build relationships. This is much different than conversations with directors during the CEO selection process: “The CEO was essentially the job applicant in those discussions; it was a courtship. Now, the CEO is in place and you’re into the marriage; you’re talking about how you want to make it work.”
- Clarify roles with board leadership: The chair or lead director plays a key role. CEOs should ask them both (i) to act as an early warning system for them if they’ve gotten offside with the board and (ii) as a buffer against micromanagement; the board leader is the right person to intervene if a board wades into management level details.
- Reassess executive team engagement with the board: CEOs inherit not just a board but a team that has learned specific ways to interact with it. “There’s a window—usually the first year—where you can shift how your team prepares materials and engages with directors.”
- Conduct a proper board evaluation: “Most board evaluations are useless.” To make them effective, ditch the surveys and conduct structured, confidential interviews with directors and senior management.
How do executives see the board?
Recent research by PwC and the Conference Board of 600 C-suite executives found that only 30% rated their board’s performance as “good” or “excellent”; 20% rated it as “poor”. Moreover, 90% believe at least one director should be replaced. Yet less than half trusted the board to do so.
Behan notes that board evaluations are one of the most under-utilized tools in governance today. If you want to find out how your executives view the board the best way to do so is to ask.
Redesign your board evaluation to use confidential interviews to collect more useful feedback and include top executives; you’ll uncover what’s really working and what’s not. Boards who do this nearly always earn kudos from the executive team as it underscores a more collaborative approach to the board/management relationship; it can transform both board dynamics and governance effectiveness.
Board materials: powerful yet underused
The power of board materials in improving CEO-board relations is often overlooked. In one instance, Behan realized they were simply “data dumps – 800 pages of charts and decks…the executive summaries were terrible.”
A recent UK study found 65% of board members rated their board books as “weak or poor,” and over 50% said reading them felt like “finding a needle in a haystack.” Poor materials lead to a lack of trust, a lack of trust leads to micromanagement and micromanagement leads to a very poor relationship.
And yet, fixing this is an easy win for CEOs. “It’s low-hanging fruit and entirely within your control,” said Behan. A CEO in one business addressed this early on and, as a result, they saw big improvements in trust, meeting quality, and engagement.
Better materials lead to better governance. Why are organizations still struggling with board books featuring questions answered three years ago? Distilling down information is the basis for all the other improvements cited above, from managing internal politics to improving trust. Transparency, concision and clarity are the three graces of governance.
“With this one, simple, achievable task, you can have the board eating from your hand,” said Behan, “And your board meetings will become more focused and effective almost overnight.”
In conclusion
The board/CEO relationship is fundamental to the effectiveness of any board. New CEOs have a unique opportunity to impose their own style and approach and should take full advantage of their first 12 months to accomplish this.
It may involve a notable shift from their predecessor’s approach – requiring changes in management’s pattern to working with the board.
But CEOs who invest the effort in making these changes find they yield significant benefits for themselves and to their executives that they can capitalize on for years to come.
