The most important relationship that Non-Executive Directors must nurture and sustain is the one with their Chief Executive Officer. However, it is a complex relationship since the CEO is in charge of day-to-day operations of the company, developing and executing strategy while the board provides a broader perspective, approving and advising on decisions. What traits would a CEO look for in a strong NED?
Tony Stacey, a retired Housing Association Chief Executive Officer with 37 years’ experience, shared a CEO’s perspective of the Non-Executive Director role with our Dynamic Boards NED Community.
You can watch the full video below.
Stacey believes that the leadership challenge is to create the maximum impact for the customer with the resources available to you. “I think that definition reads across all governance settings, whether they are regulated or unregulated, for-profit organisations, charities etc,” he says.
How as a NED in a leadership role, trying to respond to that challenge, can you do that? Stacey stresses the importance of NEDs bringing their whole selves into the room. He believes a way of doing this is to bring your work and life experience, personality, intuition and a genuine wish to do well for your fellow human beings to board meetings. “We have four ways of being intelligent – mental, emotional, physical and spiritual,” explains Stacey. What does this actually mean and look like? Read on for some of Stacey’s key points:
Show courtesy to all
Remembering your manners and treating your fellow board members with respect will go a long way. This means not having your head buried in your notes when others are speaking but making a conscious effort to acknowledge them and show that you value the points they are making. “You don’t have to sit there like the Churchill dog nodding away but just make sure that you do engage,” smiles Stacey.
Read the room
Paying close attention to the people sitting around the table can tell you a lot about the group dynamic and their collective emotional state. People’s body language can provide a range of nonverbal signals that communicate their feelings and intentions, which is why watching how someone behaves is equally as important as listening to what they say. “If you have a dozen people in a room, there will be all kinds of things going on in people’s minds and emotions. You’ll be able to get a sense of whether they feel comfortable or not for example,” agrees Stacey. Having this ability to ‘tune in’ to a room is a really important soft skill. Why? For example, if the atmosphere is tense or negative, having this awareness means you can proactively look for ways to shift the mood through humour or empathy, creating a more positive environment for the team to operate. It could also help you pick up on a member that is disengaged, but may not be vocalising their opinion, which will enable you to work towards finding out why, whether or not others are feeling the same, and how to re-engage them back into the discussion.
Listen to the voice of the customer
With a focus on employees, profits and operations at the heart of the board agenda, the importance of understanding the needs and experience of the customers using a service and buying your products can often be overlooked in the boardroom. However, failing to listen to the views of the customer at board level can, at the very least, lead to a loss in revenue and in more extreme cases, has even proved fatal. “In the Housing Association sector, all of you will have heard of and read about the Grenfell disaster”, says Stacey. “The Grenfell tragedy happened in the boardroom of the largest tenants cooperative organisation in the country. And yet, the tenants who lived in Grenfell Tower who said that ‘we don’t feel safe’ were ignored,” he adds. “They were ignored because the priority of the people in the room at the time were value for money and technical issues etc. rather than actually listening to the voice of the customer.” As a NED, it is important to take a step back from the noise of a busy agenda and check if the voice of the customer is represented on the boards you serve.
Conduct a pre-mortem
Post-mortems often occur at the end of a project and are used to retrospectively assess what went wrong and why. While this is a good practice to follow, in some instances a post-mortem can be too little, too late. “It might be worth thinking, in advance of doing a big project, what could go wrong and putting plans in place [early],” advises Stacey. This idea of conducting a pre-mortem before the inception of a project, can offer the board the chance to look ahead, identify risks and address them before they occur. This is an important part of risk management, which was a topic covered in a previous NED Community discussion by experienced Chairman, Non-Executive Director, Mentor and Author, Simon Laffin.
Be Columbo
As a Non-Executive Director, it is important for you to be inquisitive and ask the right questions to draw out useful and informative answers. Sometimes, it may seem that a topic in the boardroom has reached a conclusion but if you still have a burning question, don’t be afraid to raise it. Stacey describes this as a ‘Columbo Moment’, referring to when the fictional detective Columbo is about to leave a room before turning around and dropping his trademark phrase ‘just one more thing’. “So often as NEDs, we don’t want to be tiresome and be the one that prolongs the discussion but it may actually be you that thinks of something no-one else has thought of,” says Stacey.
Balance Support and Challenge
Your role as a NED is not to be a ‘nodding donkey’ to the Executive team. Whilst it’s important to support the Execs, you are there to fundamentally challenge them but this should be done in a respectful and constructive way. “You may be in challenge mode but you can still do that in a supportive way. Similarly, you may well want to congratulate and pat people on the back but make sure people are being challenged as well. As a Chief Executive, I want to be challenged. I don’t want to just hear froth all the time,” says Stacey.
Challenge the Chair and The Chief Executive
The Chair-CEO relationship is crucial for effective board performance but in some cases it’s too close and in others, it’s not close enough. “There’s a wonderful piece of work done in the Housing Association sector, called Learning From Problem Cases. Almost invariably, when you look at what’s gone wrong, it’s because of the relationship between the Chair and the Chief Executive. It may look fine from the outside, but there’s all kinds of things that may be bubbling away underneath. Maybe private deals being done, things not being said etc.”, says Stacey.
The Chair has no more power of authority than any other director on the board, so it is the responsibility of all NEDs to question the Chair on the CEO’s performance. However, sometimes the Board fails to do this and three common reasons are that there’s too much trust, an assumption that they will be told what they need to know or there’s too much deference to the Chair position.
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