A Corporate Board Member’s Toughest Job – Setting Company Leadership

A Corporate Board Member’s Toughest Job – Setting Company Leadership

Being a part of a company’s board sounds like a daunting job, and it truly is. And while it may be extremely tough to do, the simplest job lies here – hiring and monitoring the leadership teams, starting with the CEO. Staying focused on this task will mean more time to oversee the culture, strategy, and performance of the company.

Yet even the simplest job comes with difficult tasks to keep up with. It would be too easy if you could just hire the leadership team and watch the company grow. The board also has to figure out how to assess performance, find a new CEO in case the current one leaves, and find the best leadership structure for the company.

Assessing Performance

By completing an annual review, the board is able to accurately track and assess the performance of the CEO. Some companies even hold an off-site retreat over the span of a few days to go over strategies for staying competitive in an ever growing marketplace. Focusing on leaders that have the future of the company in their mind is crucial.

The CEO Succession

There comes a point in everyone’s career that you will either stay with a company and retire or leave for a better opportunity. In any case, the board must have a plan in place to fill the vacant CEO role when it happens. According to Forbes, the average tenure for a US CEO is 9.7 years.

With the lifespan of a company being roughly 11 years before going public or going through acquisition, per EquityZen, the board has to find a CEO that is right for the future. Even though trends show that two-thirds of the CEOs hired from within are successful, you may not have a large enough talent pool to choose from. If you are a smaller company, reaching outside may be your only and best option.

Leadership Structure

Planning the role of the CEO is only one part of the job. The structure of the CEO’s role is extremely important to figure out. In most instances now, the CEO is also a chairman of the board. It is actually quite undermining to the CEO to not be part of the board when they are the head of overall operations for your company.

It can also become a bit complicated when the CEO retires or if the CEO is the founder of the company. Having them still be part of the board can cause tension with the new CEO. It would be very difficult for a founder or retired CEO to not overstep boundaries and only handle board duties.

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Marc Simms

Right Performance Management
941-756-7401 ~ msimms@rpmba.com ~ www.rpmba.com

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