Periodically (or perhaps more often than one would care to admit?), corporate boards and CEOs have differing opinions about how best to drive performance. Most of the time, one or other of two options follow: either the board holds sway—it is the "alpha male" who employs the CEO after all—or the CEO gets their way. At the end of the day, it probably doesn't matter who "wins" as such, so long as the parties can find common ground and reach agreement. The reaching of common ground may take time, but it needs to be found, for the good of the company. But what options are available if agreement is not achieved? The CEO could decide to fold, and implement the wishes of the board. This may mean implementing decisions that they don't support, a position which can be uncomfortable. Alternatively, the CEO could continue to press their case, albeit at the risk of upsetting the board and the losing its confidence. If the situation is bad enough, whereby the parties are and remain poles apart on a substantive issue, then the CEO needs to do the right thing by considering whether they can continue in the role.
The key to making meaningful progress is the organisation's core purpose and overall strategy. With a clearly stated purpose and an agreed strategy in place, then strategic options and various proposals that arrive at the board table can be debated in the context of an agreed reference point. Either they fit, or they don't. Without such reference points in place however, opinions and personal preferences, about how to drive performance, hold sway. And we know that our opinion is always right, don't we? This latter option, of operating a business without a clearly stated purpose and strategy, is a recipe for trouble. Yet many boards and CEO try to run their businesses without such reference points. Why?
Leave a Reply.
Thoughts on corporate governance, strategy and boardcraft; our place in the world; and other topics that catch my attention.