Nov 27 2024 21 mins
The board is responsible for appointing the CEO, and the relationship between the Chair and the CEO is crucial - but often not easy. So what matters when selecting a CEO, and how can we establish and develop a good relationship between the Chair and the CEO?
In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner of Better Boards, discusses the crucial relationship between the Chair and the CEO with Sir David Norgrove, currently a Governor at the University of the Arts and Chair of the aBDRN Financial Fairness Trust. Sir David has held a number of chairing roles in leading public sector organisations. His early career was at the Treasury, at First National Bank of Chicago, and as Private Secretary to Prime Minister Margaret Thatcher. This was followed by Marks & Spencer from 1988 to 2004, including as a member of its Board.
“It's important to be on the shop floor and to see what's going on.”
Sir David relates that during his 16 years at M&S, he worked under three chairmen, all of whom held the dual role of Chair and Chief Executive - an approach less common today. While the third eventually separated these roles, the first two were dominant and highly authoritative figures. Their leadership styles had significant drawbacks, particularly a reluctance to encourage challenge or dissent. Too often, the board acted as a rubber stamp for their decisions. Despite these challenges, Sir David learned valuable lessons.
“The dictatorial approach is subtle, but it's still there.”
Sir David reflects on past experiences in the boardroom, acknowledging that standards were quite different decades ago. He recalls unacceptable behaviour, with a culture of bullying and a dictatorial approach that at times crossed the line. He believes this leadership style was deeply damaging to the business and carried that lesson with him into his later roles.
“Having the right CEO is the number one, two and three most important things for a chair.”
Sir David emphasises that selecting the right CEO is the most critical responsibility for a chair, ranking it as priorities one, two, and three. He believes that the wrong appointment can strain the chair/CEO relationship and lead to organisational unhappiness and failure to meet objectives. While acknowledging the difficulty of defining the perfect CEO, he recognises the need for trade-offs. He focuses on core qualities. A CEO must be direct, transparent and willing to speak openly about issues.
“All you can do is trust your instinct - and that can be wrong.”
Sir David acknowledges the inherent challenges of assessing candidates, especially in determining whether they meet the criteria and trust can be established. However, he believes no process can guarantee absolute certainty, as ultimately, decisions rely on instinct, which is not infallible.
“The person you're talking to is the Chief Executive. He's not your underling.”
Sir David believes building and maintaining a strong relationship with a CEO requires adapting to the individual's character. He emphasises the importance of regular, consistent communication, which often takes the form of a weekly meeting or phone call to discuss what’s happening in the business, address mutual concerns, and ensure an open line of dialogue.
The two top takeaways for effective boards from our conversation are:
1. Have the right CEO. If the CEO isn't right, then the CEO should go.
2. Ask questions. Get out and about, go and visit places and sit down with people, get them to tell you what they're doing. There's no substitute for it.