Eating What We Cook – What CEOs Need from their Boards: Webinar Summary
Eating What We Cook – What CEOs Need from their Boards
Webinar - January 21, 2021
Silicon Valley Directors’ Exchange was pleased to host a webinar in late January 2021, “Eating What We Cook -- What CEOs Need from their Boards” featuring current and former CEOs who also serve as board members - Joe Burton, Moshe Gavrielov, Penny Herscher, and Michael Hurlston, along with moderator Mark Lonergan. The panel examined what the best boards can do to improve the companies they serve, especially as it relates to relationships with the CEO. Below is a summary of the discussion.
Survey
In order to set the stage for the webinar, SVDX and Lonergan Partners surveyed current/recent public company CEOs to ask them to rate their boards and ask what advice they would have for future board members. The highest board ratings were for helpful partnerships and being aligned on the role of the board. Advice for new directors hovered around understanding a company’s strategy and the business, as well as supporting the CEO by committing to decisions once they are made and to listen and trust the CEO. A brief summary of the survey results can be found on the pdf link at the bottom of this page.
Strategy
The issue of strategy was the first topic of discussion for the panel as a way to explore the relationship between the CEO and the board. The management team tends to be focused on shorter term issues and details of the business and it’s up to the board to help look at longer term strategic issues. In order to be the most effective, the board needs to understand the fundamentals of the business in order to build strategic discussions. A great board member will challenge the quality of the thought process of the management team. Yet the timing of having strategic discussions is tricky - it’s important to do so on a regular basis, but perhaps not too frequently.
CEO and Chairperson Relationship
The relationship between the CEO and the Chairperson is one of great importance. The CEO wants one focal point, such as the Chairperson, in order to communicate one time and then trust the Chairperson to disseminate the information. A strong chairperson can help the CEO a great deal with regards to managing board dynamics, managing communication, and providing aggregate information. Additionally, should a major situation happen - such as M&A - the CEO will want to be able to talk to the Chairperson in a safe and trusting space. For a CEO new to his/her role, the Chairperson is also a helpful mentor and sounding board as the CEO gets up to speed on the company.
Board Member Roles
The CEO should have a role in the process of new board member acquisitions. There should be a clear governance process established and the CEO should be involved in the creation of the role definition as well as having veto power for the potential new board member.
There are always sensitive situations as it pertains to board member tenure and behavioral challenges. It’s suggested that tenure/age limits allow the Chairperson to have difficult conversations when it is time to move a board member off the board.
CEOs see the value in board members who sit on multiple boards in order to add to the depth of their experience and familiarity with difficult situations.
Accessibility and the Management Team
Accessibility is a key aspect of successful board and CEO relationships. There should be board visibility to the rest of the management team beyond just the CEO. The panel was in agreement that there should be access to the management team by individual board members. Oftentimes, there is an alignment of certain skills between a board member and a member of the executive team, which can lead to a mentoring opportunity. Additionally, board members wanting to educate themselves on different aspects of the company can find value in accessibility to the management team.
Succession
Succession planning is a key responsibility of the CEO. A CEO must be secure in his/her role in order to have an open conversation about succession planning. The CEO would be wise to work with the Chairperson or the Chair of the Nom/Gov Committee to discuss potential successors. It would also be prudent to have succession planning discussions on an annual basis.
Advice
GIven that there were more than 300 new board directors in Silicon Valley in 2020, the session closed with some advice from the panel for new public company board members. The panel agreed that learning about the company and the business is key. Be willing to put the time in to understand the company. And don’t just stop at talking with the CEO; be willing to talk to the management team and others who can help fill in unique details of what the company is about. The last piece of advice was to be authentic in your role as a new board member.
Resources