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What a board really wants from a CEO

Out of all the functions of a board, the most critical is appointing the right person as CEO and monitoring the performance of that person.

ceo

The ‘right’ CEO is someone who can work with the board to develop and then implement strategic and business objectives and drive performance to achieve those objectives in a sustainable way.

Increasingly, the relationship between boards and CEOs is seen as one of collaboration, where both parties work together to achieve company objectives while maintaining the important distinction between the board’s role (to govern) and the CEO’s role (to manage).

In this context, board expectations of a CEO might be broadly viewed in two dimensions.

First, a board expects a CEO to apply their skills, experience, and industry knowledge to deliver the company’s strategic and business objectives.

Second, a board expects the CEO to be committed to a constructive and open relationship with the board, built on trust and candour.

Deliver strategic and business objectives

It is important that, at the outset of the CEO’s appointment, the board discusses and gains agreement with the CEO on clear performance expectations. In essence, boards want CEOs to work with them to develop an appropriate strategic direction and plan for their company in response to the strategic and competitive environment.

The CEO also has the key responsibility to implement that strategy and hence drive company performance.

Both financial and non-financial performance indicators are critical for the board to monitor progress in achieving the strategic plan. Boards should also have a policy and process for reviewing the performance of the CEO against these performance indicators, which involves at least an annual formal review. Boards will expect their CEO to participate in that process in a constructive and engaged way.

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