Working with the CEO

No company can prosper without an effective CEO and without a strong working relationship of mutual trust and respect between CEO and the board. The CEO occupies in a unique, often peculiar, position in the company’s governance. On the one hand, she or he is a member of the board of directors, often also acting as its chairman. On the other hand, the CEO is an employee, hired, evaluated, compensated, and, sometimes, fired by her or his fellow directors.

Isolation from both board and senior management can too often become the CEO’s enemy. With respect to the board, the great majority of his or her peers on the board are independent directors. Collectively, they represent a mix of skills, backgrounds, and expertise, and they have a fiduciary responsibility is to think and act independently of management in the company’s best interests. Today’s board is a far cry from boards of not long ago in which most of the non-management directors were chosen by the CEO with a greater uniformity of background and skills. With respect to management, CEOs too easily suffer from the “truth to power” syndrome, in which those whom they oversee fail to present a complete and realistic assessment of challenges facing the CEO, particularly in the governance arena.

At MastersRudnick we work with CEOs to avoid or to pierce the isolating veil. We act as confidential sounding boards, helping them understand and develop relationships with the non-management directors. Often this work involves a mutual process between CEO and board as to the roles which each plays with respect to the company’s governance and affairs. New CEOs, particularly, may need assistance understanding the components of good governance and how they can be implemented. Most importantly, however, is developing relationships of mutual understanding and trust between CEO and each of the other directors.

Directors must understand the company’s business drivers, operating environment, and major risk factors in order to perform their jobs successfully. In doing so, they rely on the CEO and senior management to provide the appropriate information about the company and what it is doing. Board’s information needs can differ significantly from management’s in this regard.

We help CEOs and their direct reports understand the board’s role and responsibilities versus those of management. Building on this understanding, we work with the CEO and his or her team to provide the right kind of information and in a format that meets the board’s expectations and requirements. In doing so, we help the CEO strengthen trust with the board and build the kind of solid working relationships that the company needs for effective governance and leadership.

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