John Ainley: The relationship between the chair and CEO can make or break a business

Two’s company: the relationship between chair and CEO can make or break a business

A good relationship between the chair and CEO is one that is challenging, supportive and upholds the interests of all the relevant stakeholders. A relationship that functions in this way can deliver great value but if there is a poor understanding of each other’s roles, the conflict can be seriously undermining for a business. And we often see examples where the relationship has broken down or was never established in the first place. This can be problematic at any time, but put a business under pressure whether related to external crises such as COVID-19, or an internal problem and the negative effects are likely to be magnified many times over.

According to our recent Alexander whitepaper – A view from the boardroom – in which many of Britain’s top business leaders talk about what it takes to succeed or fail as a modern CEO, a big issue has become a blurring of roles between CEO and chair. Conventionally the chair runs the board while the CEO runs the company but the growth and complexity of stakeholder relationships has changed in recent years and made the delineation of roles less clear. Throw in a crisis and the interference of the chair in executive decisions can lead to problems. But, quite simply, no business can afford to have a dysfunctional partnership at the top.

How then do you go about creating the best possible working relationship between the chair and CEO?

Developing a better understanding
We have a structured process at Alexander where we work with clients to help chairs and CEOs develop a better understanding of each other’s strengths, weaknesses, differences and development needs in order to develop a more productive relationship.

The process begins by interviewing the chair and the CEO separately and asking them a series of questions: what’s going well? What’s challenging? Where are the business opportunities? We then share those notes with the chair and CEO, bringing them together in a conversation to look at how they can go about understanding each other’s perspectives and the different challenges each faces in their role.

Co-create a way of working
Through that conversation we then co-create a way of working that enables the two parties to be understanding of the nature of each other’s roles. The result is a greater consciousness of each other’s strengths and weaknesses, and how they can work together to be more effective.

There’s often a set of ground rules established which reflect not only their personality differences but also a deeper understanding of the regulatory requirements of the roles, and an exploration of what that means in practice.

A healthier relationship
With some clients, that has even meant a physical, written charter of how the chair and the CEO want to work together while with others, it is can be a more informal arrangement. But it is because they get to know each other better through this lens and know what each wants to achieve during their tenure as chair or CEO, that enables them to be more open, straightforward and less suspicious of each other and each other’s motives. It develops a healthier relationship which ultimately helps to deliver better value for their organisation.

To find out more about the relationship between the chair and the CEO, download Alexander’s latest whitepaper – A view from the boardroom.