The CEO As Board Chair?

 

Crowns

Over the past thirty-five years as a nonprofit governance and planning consultant, I have heard one consistent theme from CEOs: “I work really hard to support my board.” And, along this theme, I also hear, “I don’t object to the hard work; I question what this work gets me.” But imagine, I propose, if the CEO’s board really were their board.

Among corporate governance experts and boards, there’s a debate “raging” (as much as such debates can rage) as to whether CEOs should also serve in the position of Board Chair. From my understanding of a recent Conference Board Report, CEOs in Corporate America commonly hold the position of Board Chair. CEOs in Corporate America, of course, have every incentive (e.g., money, reputation) to make sure they get the best decisions from their boards. And of course, they have much to lose (i.e., their jobs, although evidence suggests this may not be so bad) should they steer their ships in the wrong direction. But there are those who question this practice, suggesting that CEOs may have so much to gain from how they steer their boards that they may not be forthcoming enough to ensure their boards can prudently fulfill their fiduciary duty.

This debate rarely occurs within the nonprofit sector, where it is a common practice—perhaps even considered a “best practice”—to make it very clear that the CEO does not fill the role of Board Chair. For nonprofits, having the Board Chair seat filled with a volunteer ensures a kind of objectivity and fiduciary well-being for the nonprofit by reducing the possibility, as is raised by the questions in the Corporate sector, that too much power will be concentrated in one place and nonprofit boards would be less able to fulfill their fiduciary duties as a result.

At the same time, I and many nonprofit governance consultants hear all too frequently from CEOs their frustration with keeping their boards fully engaged and, more importantly, useful to them. In my experience, many nonprofit CEOs express that the work put into governance does little more than reduce the attention that’s put toward the real work of pursuing mission. For many CEOs, Boards simply do not provide added value, although they may be fulfilling, minimally, their fiduciary responsibility. (It’s worth noting, though, that a nonprofit board has a responsibility to safeguard the broader public’s interest. In the corporate sector, the board is more about safeguarding its own interests and those of the shareholders.)

To this point, in one small study, I recently reviewed the winning business plans submitted for a competition. In the sections around governance, the perfunctory language about “fiduciary responsibilities” was provided. At the same time, more than half the plans said that the CEOs had also organized Advisory Boards/Committees where the CEOs could get substantive and useful input, support, and connections, all necessary for pursuing mission. The CEOs managed these structures, did not report to these structures, and did not find them onerous.

I might argue that my findings point more to problems in composition than in leadership, but this brings me back to my subject: What if nonprofit CEOs were the Board Chairs? Would this be such a bad situation? Members can always reserve time alone when they can discuss and take action around CEO performance (providing a job for the Vice Chair) and board members always can and should add incentives and performance goals to measure performance for action.

Why should board members be concerned? While many folks are afraid of flying, they forget that the pilot has as much of an incentive to bring the passengers to their destination as they do to get there. I propose that boards that worry about CEOs serving as Board Chairs may be similarly forgetful; instead, they should remember that CEOs want great outcomes as much as board members do.

So, my proposal: Consider making CEOs the Board Chairs. As Chairs, CEOs have every incentive to steer the board right, particularly in making sure that the board fulfills its fiduciary duty. But the CEO-as-Chair will not stop at ensuring that fiduciary responsibility is achieved. The CEO-as-Chair will know what composition they need and, with full authority, actively recruit. The CEO will, as Chair, manage board meetings efficiently and with the goal of getting strategic, and maybe generative, thinking and action that is helpful. The CEO-as-Chair will make certain that Committees and/or Task Forces conduct only useful work that supports the Board in being useful and productive.

But is there is an alternative solution? By and large, the volunteers selected to be board chairs do not have the core experiences and skills necessary to effectively manage a board of directors. Clearly, training could inform and prepare those who would be, or are, Chairs, which might make the idea of replacing them with the CEO unnecessary.

 


 

Mike Burns is a partner at BWB Solutions. His practice focuses on strategic planning, nonprofit governance, organizational development, and helping nonprofits assess their readiness for mergers and partnerships. He frequently posts to his blog, Nonprofit Board Crisis, where he highlights nonprofit internal issues. In addition to his work at BWB, Mike serves as Secretary of the board of the Alliance for Nonprofit Management.  The Alliance is an association of individuals and organizations devoted to improving the management and governance capacity of nonprofits.