When You?re CEO but Not Chairman
Q: I'm a finalist for the CEO slot at a fast-growing tech company. The potential here is great, but I have one concern. The current founder/chair/CEO will be leaving the chief executive position but will hold on to the board chair slot, and it looks like he intends to stay as chairman permanently. Any tips for dealing with the board as CEO when I won't be its chair?
A: The CEO/chair mix has become standard in this country, so much so that we too often assume that a CEO minus the chair's seat is somehow on probation. But this model is growing more acceptable, especially at companies like the one you described, a newer, fast-growing firm where founders and initial investors still hold large chunks of equity.
Since you won't be directly leading the board, your first task is to scope out just what sort of a chair your chair wants to be. "You can't do enough research on the chair/founder," says Larry Stybel, of the search and consulting firm Stybel Peabody. "Get a sense of his business maturity. The founder/chair may not be all that mature and may have control issues with you." Stybel suggests that adding a third leg to the power stool may be the best approach. "Create a lead director. The chair might actually welcome a lead director, and the role is valuable when the inevitable conflict comes. Two is a bad number in the boardroom."
"Does the chairman intend to hold a perfunctory, honorary role, or does he intend to exert real power and influence?" asks Tom Sherwin, founder of the CEO Resources consulting firm. "I can't picture an adversarial relationship here that works for the CEO. That's a risky social disease -- sooner or later the CEO loses, paying a price either in his job, agenda, or compensation."
Rather, make it clear that your chairman can help you better perform the CEO's job by concentrating on his or her own board duties. "Often, a board chair doesn't know how to be a chair," says Sherwin. While the CEO needs to know the agendas and priorities of the board members, your chairman should be the expert, "knowing what their priorities are, depending on the business they come from, and the lens of experience they view your business through." The chair "positions the board agenda to keep the board at an oversight level."
Also, the chair is the one who is "in communication with the board members between meetings, or who sits down with a board member over dinner," says Sherwin. This turns the separate chair from being a potential turf contender for the CEO into a valuable board liaison tool. The smart CEO in turn works the relationship with the chair, and thus everyone stays happy.
Copyright © 2000 Ralph Ward's Boardroom INSIDER