At Leading Governance we are constantly looking for new and better ways to help clients improve their governance. We recognise the vital importance of the relationship between the Chair and the CEO, and we’re always keen to hear from them about what seems to work best. We recently brought together a group of 7 charity Chairs to discuss how they felt effective Chair / CEO relationships could be developed. The organisations represented were very diverse, ranging in annual turnover from £100,000 to £20 million.
Roles and relationships
All of the Chairs in our focus group agreed that the relationship between the Chair and the Chief Executive was a key element in healthy and effective governance, but what are the ingredients of good relationships? Our Chairs felt that a healthy balance of challenge and support was essential. One stated that ‘avoiding complacency’ was a key challenge, as boards get used to the style of any particular CEO. Even with a high degree of confidence in a CEO, the Chairs recognised the need to challenge assumptions in order to get the best possible information into the boardroom. “Regular communication is vital, and it’s a two-way process. The CEO also needs to challenge the board, and we need to be open to this challenge”. They also recognised the need for consistent support for the CEO in what is often a lonely role. While they saw merits in coaching the CEO themselves, some of them insisted that their boards also bought in independent external support for such a key position.
The increasing demands of the Chair role were discussed and the attributes of the ideal candidate were considered.
A level of openness and transparency with staff was seen as important, while respecting the boundaries of confidentiality when necessary. Clarity of roles was seen as particularly important, ensuring that both board members and staff understand the role of the board. The Chairs we talked to felt that the Board should seek to strike a balance between being visible to staff, while ensuring they are not inappropriately involved in operational matters. As one Chair put it “Communication between the board and staff is a key issue. There needs to be enough of it that we know the culture is healthy, but we also need to ensure board members stick to their roles, and don’t interfere in operations”. It was also agreed that the Board had a role in ensuring that staff respected the role of the Chief Executive.
Investing in the CEO
Getting the right person, investing in the CEO, and helping them develop their skills, was seen as vital. There was broad recognition of the worth of a good Chief Executive. “As a commercial person, I couldn’t get what all the fuss was about (in relation to recent public outcry regarding high salaries for charity executives). If you have an outstanding Chief Executive, it’s worth paying them a good salary to get results”.
There was broad recognition that investment in the CEO is not just a monetary issue. The Chairs present felt it was important for Board Members, and the Chair in particular, to spend time with the CEO. It was felt this was useful in developing productive working relationships, where both the Board and CEO worked towards a shared vision.
When we had asked CEOs how they felt about paying trustees, they were largely in favour. The reasons given centred on expectations of high quality input, and being able to call on the Chair more readily for leadership support. Conversely, when we asked the Chairs the same question, most felt it shouldn’t happen (other than expenses). The Chairs we listened to felt it was important to preserve the voluntary nature of the role. They agreed that payment would be unlikely to attract people of the calibre needed, or influence their decision on whether to take up the role. If payments were to be made, some felt that there should be the freedom to make a payment to the Chair alone (and not all trustees) if it can be afforded. They felt that this reflected the importance of effective board leadership, and the increasingly demanding role of the Chair in this.
One of the biggest issues for the board Chairs was “How can the board know how well their Chief Executive is managing the staff team? What can we do to get that assurance?” There were examples given of a difficult change in Chief Executive, and discoveries afterwards that all was not as it had been presented in the boardroom. One board Chair suggested that Chief Executives should have a 5 or 7 year contract (as in some private companies), giving the board the option to end the arrangement if appropriate.
Difficulties with the Chief Executive were seen as very testing for a voluntary board, and time consuming for everyone, particularly the Chair. Grievances at that level created real challenges for the board, and relationships often suffered. Board team development was seen as key to effectiveness. Ironically, difficult periods of change had sometimes contributed to building the board team.
Finding ways of sensing the ‘climate’ in the organisation, without undermining the authority of the Chief Executive, was seen as important. Site visits (with clear guidance notes to all involved) and away days with staff input were cited as good ways of observing the culture of the organisation in practice.
Overall, the Chairs we spoke with felt their CEOs deserved their support and respect. They were mindful of the differences in the roles of CEOs and Chairs, and worked to ensure they challenged the CEO, while providing support, particularly in public and in front of staff. Time and again the Chairs stressed the need for positive working relationships between the board and executive, and Chair and CEO in particular, in providing effective charity governance.
Joy Allen, Leading Governance