The chair and CEO – friends or enemies?

If there is one critical business relationship that has been sorely tested by the pandemic, it’s that between the chair and the CEO. As leadership has responded at pace to not only keep businesses afloat, but also to pivot business models to react to changing markets, the two roles at the top of the organisation have been under scrutiny.

The risk is that the relationship becomes strained if the partnership is characterised by blurred responsibilities, inconsistent communication, and/or contrasting personalities. Then it can be stretched to breaking point and beyond.

In a number of ways, the pandemic has simply served to accelerate trends that were already in evidence. In Alexander’s recent whitepaper – A view from the boardroom – we asked a number of top business leaders (CEOs, former CEOs, and chairs) for their views on the relationship between the CEO and the chair. The results uncovered a picture that’s more subtle and complicated than many students of corporate governance might imagine.

Roles become blurred
The chair runs the board, while the CEO runs the company. That’s the understanding, but in practice the two roles have become blurred. Some respondents to our survey felt that the chair was getting overly involved in executive decisions, particularly at a time of crisis.

Historically the chair may have also looked after many of the wider stakeholder relationships, for example, but as the CEO’s role has become more complex, those responsibilities are less well defined leading to more uncertainty.

Chair as a mentor
No one questions the importance of close teamwork between chair and CEO, and mentorship was identified as critical, particularly if the CEO was relatively new to the role. Of course, the quality of that mentorship depends, as one respondent to the survey said, on the relationship between the two being “helpful and supportive” and having the freedom to “bounce ideas around”.

Trust
High levels of trust should be a feature of every effective chair/CEO relationship. One chair interviewed believed the chair has a responsibility to spend time building that trust. Another chair said: “Trust and respect are the most important factors I look for in a CEO if I take on a new chair position.”

None of this means, though – to answer the ‘friends or enemies?’ question – that they need to be friends. “You don’t have to particularly like the CEO,” said one chair, adding pragmatically, “in fact, it can be better if you don’t because they can be easier to move on that way.”

Whether indicating a lack of trust or just more effective corporate governance, the research also revealed that the modern chair is prepared to dig deeper into the activities of the CEO than they might have done in previous years. “Now it is common for there to be a session at the end of each board meeting without the CEO present. Ten years ago, that was unusual,” concluded one chair.

You can find out more about the relationship between the chair and CEO in Alexander’s latest whitepaper – A view from the boardroom.