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QA: Is Our CEO Headed Over the Edge?

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Q: "At our company, those of us on the board have always had a fairly open communications with staff, but some of the things I've been hearing lately have me concerned. A couple of senior managers have mentioned that our CEO's behavior is becoming a problem. In the last few months he's started throwing temper tantrums at subordinates, grown withdrawn and defensive, is missing meetings and making decisions that don't seem logical. I've known this man for a few years, and this doesn't sound like him. In dealing with our board he seems reasonable enough, but I do know that he's gone through some personal traumas at home over the last year. I hate the idea of getting the board into this situation, but what should we do?"

A: Such "Caine Mutiny" situations are not common in the boardroom, but when they arise they bring enough trauma to last a lifetime. As a first step, recognize that the board will likely be the last to know about such a CEO problem. By the time anyone works up the courage to say something to a director, erratic CEO behavior will be an open secret among most of the top staff. Dr. Mortimer Feinberg, chair of the New York consulting firm BFS Psychological Associates, suggests that you begin by "speaking to another director on the matter, or forming an informal committee, playing everything low-key."

The next step is for the board to launch an inquiry, but not with the stated intent of profiling the CEO. "Go to the CEO and say that, in order for us to feel more comfortable we'd like to do a morale study of management here. This needs to be non-threatening, making it clear that you're not trying to lynch him." Feinberg notes that the board can conduct these subordinate interviews, but it may be wiser to hire an outside consultant or respected former board member who has good relations with the CEO. The CEO's reaction to such an inoffensive morale review by the board will give you a clue in and of itself. "If he's not defensive, says he has nothing to hide, go ahead, that's a positive sign. But if he rejects it, gets defensive, and says the idea is crazy, that a different indicator."

The board should study the results for signs of "irrationality compared to past behavior. You're looking for deviations from the baseline, like now coming in late, or changing in relations with peers and subordinates, or even throwing things." A distinct negative change, noted widely by employees, will suggest that there is more involved than just a few disgruntled employees. In that case, a respected board member should privately suggest to the CEO "that he get some help, or consider a leave of absence." Express positive concern rather than cold disinterest, and offer the board's support. Still, as a board member, you must recognize that "you have a legal obligation to take this issue seriously." A CEO who's slipping over the edge is not only a human tragedy, but also a fiduciary responsibility.

Copyright © 2001 Ralph Ward's BoardroomINSIDER




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