The relationship between a CEO and the board can be tricky – especially if the CEO sits on the board. In the past few years we’ve seen CEO turnover increase which means there is a lot of time where the CEO is new to the company. Recently, The River Group put out a report that examined new CEOs and how they fit into their role. We are going to use this data to give board members the power to develop their CEOs more quickly and integrate them into the company better which will yield stronger results faster.
1.) One of the most interesting (although not surprising if you’ve ever been a CEO) findings is that most CEOs find that they are less prepared than they originally thought for the role.
On a scale of one to ten – ten being most prepared – CEOs were at a 7.2 on their first day on the job, but six months later they were at a 3.2 on average. This can be terrifying for a new CEO – they have so much pressure on them. If they make a wrong move, people lose their livelihoods. As a board, it is important to rally around your CEO. Have regular check-ins and make sure they know that you have their back and they can share their fears. A lot of times the CEO will feel like they need to know everything, it is the board’s job to help them understand that this is a learning process. We never stop learning and developing.
2.) CEOs also tend to experience an intense amount of isolation according to the report. As the old saying goes, it’s lonely at the top right?
When your brain searches for emotional connection and only finds isolation, you go into panic mode. It’s an instinctual reaction – it’s part of your survival code. When this happens, you start to lose cognitive function and your ability to make rational decisions decreases. This is why it is so important for the board to provide a safe haven for the CEO. The CEO needs a place where they can go to vent frustrations, share concerns, and feel connected without shame or blame. Michael Gallagher of Allergan is a great example of this. When Allergan’s board faced a hostile takeover attempt, Gallagher focused on giving everyone a safe place to share their concerns. From direct conversations in the boardroom to late night phone calls, Mike was there for his board and CEO which made a real difference in the long run for Allergan. Board members who have experience as CEOs can be especially helpful because they can relate and empathize with the struggles of being a new CEO. The board should also encourage the CEO to find emotional connection outside of the business to maintain a healthy work-life balance.
3.) The River Group found that the most fulfilling part of a CEOs job is the positive impact they make on peoples’ lives, but when they make tough decisions that had a negative impact, it weighs on their conscious much more heavily.
One CEO says, “You are entrusted with people and their careers. It’s an enormous responsibility—and one of the loneliest parts of the job.” This is a great point of focus – directors need to pay attention to what is happening with their CEOs and reach out when they are making difficult decisions. Often times a CEO will retreat or feel overwhelmed and shut down. It is the goal of the board to step in and provide emotional connection and empathy during those difficult times. Remind the CEO that they are doing the right thing for the company and the benefits their decisions are bringing.
Board leaders should take time to meet with new CEOs to start them on the right path of emotional safety. If emotional connection is already a priority in the boardroom (which it should be), then the Chair can lay down the law – explain that there is no judgement in the boardroom, that we actively listen and engage, and we address the emotion behind the tension when it comes up. Explain that the board would rather receive bad news than an unexpected surprise. Starting with this will help guide the CEO in their new role. Board leaders can also take some time to really discuss the mission, vision, and core values of the company and how the board hopes the new CEO will fit into these elements. Gene Goda has led dozens of boards, and when times get tough he asks the question, “what are you doing to add value to this company, and are you deriving any value by being here” – this questions helps get board members to the right place and often weeds out any negative influences on the board.
The board has the power to guide new CEOs to success. By providing the proper emotional support, they can set their CEO and their company up for success. For more information on developing board relationships, please contact us at [email protected].