Boards of directors must support the chief executive officer. But they also must challenge the CEO. If they do one without the other, it can lead to trouble. But trying to find the right balance between support and balance can be tricky, particularly because human beings can so easily misunderstand one another's intentions.
"It's not natural or easy to support and challenge at the same time. We're not trained for it," says Jean-François Manzoni, a professor of management practice at the international business school Insead, in Singapore, and graduate of both HEC and McGill University in Montreal.
Finding the right balance is a critical challenge for corporate leadership. In a recent article on the Insead website, it's one that he compares to walking a tightrope.
He's co-author of The Set-Up-To-Fail Syndrome with Jean-Louis Barsoux of IMD Business School in Switzerland, which probed how people's assumptions about their colleagues can become self-fulfilling. Think the worst of somebody, and their actions and your interpretations will probably combine to prove that instinct correct. And that can happen with boards and the CEOs they oversee. "I see what I want to see," he said in the interview. "I interpret reality as I want. It happens not just in the organization but between the board and management."
Usually at the start of a CEO's tenure the board is very supportive, having hired the individual. Challenge is unlikely. But doubts will start to appear, either because questions of competency arise, the CEO fails to consult the board members to the degree they expect, or policy differences emerge.
At Sanofi SA, a French pharmaceutical multinational, the board started having doubts about CEO Chris Viehbacher, as he seemed to be full of himself and not treating them with respect, Prof. Manzoni recalls. The CEO failed to run an issue by the board that he felt was within his power to decide since it wasn't a major project, but board members felt otherwise, as it involved job losses in France, which could stir up public and government resentment.
Once the distrust set in, it compounded. The CEO became wary of consulting a board that was wary of him not consulting it. "Whether the label is egomania or underperforming or narcissistic, it becomes self-reinforcing," Prof. Manzoni said. "We tend to think we can hide our thoughts effectively. But the evidence is human beings are more transparent than we believe. So you think you can walk into a room and the CEO won't know you're annoyed. But the CEO knows."
Combining support and challenge, Prof. Manzoni came up with a four-element matrix of how the board-CEO relationship might function:
Absentee board: This occurs when support and challenge are both low, and is obviously not preferred.
The challenge trap: This covers when challenge is high but support is low. The board will be sniping at the board. It is unlikely to end well.
The support trap: The board is highly supportive and doesn't challenge the CEO much, if at all. This may be okay in the honeymoon period after an appointment, but beyond that it indicates the board is not doing its job – and not helping the CEO with the kind of productive discussion needed.
Support and challenge: This is the ideal state – high support and high challenge, a very effective yin-yang in which the two seemingly contradictory elements combine synergistically. But it's hard for boards to operate in that space.
He advises boards that to challenge, they need competency to question the CEO, which means recruiting board members from a variety of fields. He says a board might not recruit an expert on social media to its ranks, feeling the vacuum might be filled by hiring consultants. But you can't ask probing questions of the CEO without knowledge.
Board members tend to hold back from raising doubts with the CEO about the way he or she is handling matters and often don't know others harbour the same concerns. That's why he recommends boards hold a short private session without management after every board meeting so they can tell each other about any concerns – without the secret session being unusual and raising hackles. Allowing doubts to simmer too long can lead to things boiling over eventually.
He notes that people accept feedback more easily if it comes from people who have good intentions and who come across as fair. So board members must frame their challenges from that context. "If the CEO trusts the board's intentions and feels the feedback is balanced, he will be more open to challenge," he said.
Ideally, the CEO should open himself or herself up to challenge, knowing that's part of a productive board's functions. If not, the challenges will emerge in other forums, perhaps public ones. "If the CEO is perceived to be coachable, they will get more support than somebody seen as defensive," he said.
All of that involves good intentions by both the CEO and the board. Support and challenge. When that balance goes awry, they will think the worst of each other, and it will spin out of control, in a messy, destructive brawl.
Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter
Harvey Schachter