WHAT DO CEOS NEED TO KNOW TO SUCCEED TODAY?
In 2012 Chief Executive Magazine published an article under the Leadership Agenda banner recognizing the change in the traditional world of the CEO.
In recent years the world of the CEO has been turned upside down. According to the article, “...in 2008, three Fortune 500 CEOs were replaced by members of their respective company boards. Each year since then has seen a threefold increase in that figure. Why are so many CEOs being shown the door?”
Of course, we recognize that the market then looked completely different to what it is today. There is no doubt that it was a significant piece of the equation - one that sent shock waves through company Boards with Directors looking closely at CEO performance and expectations.
Consequently, this brief handbook is designed to help CEOs and highlights a number of things CEOs need to recognize and act upon if they too are not to lose their heads to the ax!
If you’ve been sitting in a room with someone for the last few years, discussing the state of the business and where it’s evolving, you probably have a pretty good idea where their head is on strategy.
When you reach out to one of your own and put him [or her] in the CEO seat, you’re automatically getting someone who aligns with you strategically.”
So it begs the question: Who is charged with forging a Corporate Strategy - the Company’s Board or its CEO?
1. Align yourself with the Board
The relative ‘short-termism’ of market-related dethronements of CEOs in 2008 soon disappeared, only to be replaced by a longer-standing issue - “a lack of strategic alignment with the board” according to John Wood, Vice Chairman of Heidrick & Struggles. According to Wood, more and more companies have sought to replace CEOs, who don’t embrace their strategic directions, with one of their own:
In my experience as a Leadership and Business Coach, the more I encourage leaders to engage their team in developing a strategy, the more they see that those who report to them are fired up about executing it - and, more interestingly, when things don’t go well the more they are prepared to take ownership of it and fix it.
However, this requires something of a mindset reset, for even a shared responsibility environment might be something of a stretch for some CEOs.
The majority of CEOs are accustomed to a higher degree of control over strategic direction, so it is no surprise to hear the view vocalized that, “It's the CEO’s job to do the vision and the execution - YOU are immersed in the business, NOT your Board."
2. Demand Collaboration with your Board
Board involvement is on the rise— and rightly so. Today, every operating blueprint is so complicated - so unless you have a collaborative way of coming up with a strategy, and also the operational executions, the company will fail. You have to create a collaborative management structure and a way to execute the operational plan,” according to Faisal Hoque, Founder and CEO of the Management Solutions Provider, BTM Corporation.
The days of Board Members simply showing up quarterly to rubber stamp a CEO’s direction, are long gone.
It is now the norm for both Companies and CEOs to expect counsel and input from their Board Directors.
“I had a troubled Board,” Hoque said. “I had one [Director] who was sleeping, one who wanted my job, and one who didn’t read the Board Book.
So I said, ‘For this Company to go forward we need a Board that acts as a business partner—that will actively engage and ask hard questions—but in a respectful, constructive way.’ We changed out 75% of the Board and the impact to our company was huge.”
At BTM, Board members are expected to contribute directly to the company’s growth. We want our board to be a working board,” Hoque said. “So we give assignments to our Board Members to make sure that they can actually help the Company to get to the next level ... and to know who can help if something were to happen to the CEO.”
3. Learn how to Achieve Alignment with Your Board
So how do you ensure you don’t follow the same route as Panavision? "The relative roles of the CEO and the Board have to be defined,” says Bob Darlene, CEO of Omni Capital.
COMMUNICATION AROUND ROLES IS KEY.
Typically, the schoolbook states that the Board members represent Shareholders and are largely overseers, while management is charged with execution for the benefit of the Shareholders.
If the board gets involved with management, you can’t have mixed messages concerning roles. In fact, ultimately, successful Strategic Leadership may depend more on CEO, Board and management team alignment around strategy than exactly who sets strategy.
Whether the Board sets strategy or the CEO decides it, there has to be consensus among that entire group in order for it to work. However, turbulent times can knock alignment off- track.
When CEOs and board members are under pressure to address a disruption and to do so swiftly, a disagreement about the best course of action can all too easily erupt into a crisis of leadership.
But CEOs can generally avoid that unhappy fate by changing their approach to conducting board meetings.
Rather, Business Leaders should focus on building Board engagement by using meetings as an opportunity to educate board members on the competitive landscape in their respective industries. CEOs need to educate the Board by succinctly presenting the external movement taking place—not what the competition has done, but what you see your competition likely to do.
That’s how you’ll get partnership with your board.