A friend once told me he was concerned that his boss, the CEO, was not telling the Board of Directors the truth. That is a terrible place to be in any organization, and one I would not wish on my worst enemy.
If you are a member of the Board, how do you know your CEO is telling you the truth?
“Well,” you say, “we trust him.” Or, “We’ve known her for a long time.” Or, “He’s my wife’s brother.”
I believe in the power of trust, and think it is the key to great leadership, but as a Director, you are accountable to the moral ownership of the organization, and the CEO is accountable to you.
So, how do you answer the question, “How do you really know your CEO is telling you the truth?” John Carver in Reinventing Your Board, suggests three ways a Board can acquire accountability data:
(a) by internal reports, in which the CEO discloses compliance information to the Board,
(b) by external reports, in which an external, disinterested third party selected by the Board to assess compliance with board policies, and
(c) by direct board inspection, in which a designated member or members of the Board assess compliance with the appropriate policy criteria.”
The problem with Boards is it is easy to get lazy and only look at the internal reports–a report created by or under the direction of the CEO–and not look at the external reports and direct inspection that are needed to get a true picture of the CEO’s performance in achieving the “Ends” of the organization.
Carver reminds us that the “Board members and CEO are colleagues.” The relationship is “collegial, not hierarchical.” However, the Board’s desires must be clear, and the CEO response must be in compliance with those desires. Both have a job to do and need to be “personally responsible” for the job they do.
They also need to be “cumulatively responsible,” or as Carver puts it, “accountable for the total contribution and compliance of his or her team, however extensive that team might be.” How will you know if the CEO is accountable? Start using your entire accountability toolkit: internal reports, external reports, and direct inspection.