Hail to the Chief, but We're in This Together
from November/December 2006
What should boards ask CEOs to do more of? What are some of the most annoying CEO habits and behaviors?
Communicate, communicate, communicate. Hail to the chief and all that, but you're in this together.
Probably three things—to think strategically about the future of the business, to communicate more regularly with independent board members, and to listen to the issues that independent board members raise. CEOs sometimes feel that questions from independent directors are more an annoyance than useful. That’s happened to me a couple of times, and in private executive sessions I raised the issue with other independent directors. In every case, they’d had the same experience. So we spoke frankly with the CEO about the need for more open, transparent communication. We succeeded. It’s effective when you reach a consensus.
Ricki Tigert Helfer, 51
Consultant, Financial Regulation and Reform International, New York City
LifePoint Hospitals Inc.
We constantly ask our CEO for more information, better analyzed and digested. This means that the company executives must think more carefully about what they’re doing and how it shows up in the numbers. In my experience, this is a work-in-progress at every firm. But the board must demand a higher level of strategic analysis from management in every document and at every meeting.
Gordon Walker, 62
Chairman, Department of Strategy and Entrepreneurship, Cox School of Business, Southern Methodist University, Dallas
Alico Inc.
Some CEOs commute to their companies. It is never going to be an ideal situation, and it’s usually not good. You see a few CEOs who live across the country and commute four days a week to the company. That’s less than full effort. If the CEO won’t move to take a job assignment, I think it’s a sign of trouble.
Thomas L. Cunningham III, 63
CPA and Financial Planner, Plano, Texas
Encore Wire Corp., Healthaxis Inc.
A CEO cannot overcommunicate. CEOs must stay in touch with the board, not wait until the next board meeting. We’ve convinced a number of CEOs to have separate sessions with us the night before each board meeting, in an informal atmosphere. We let the CEO sit back and tell us what’s on his mind, not the formal stuff that will come up the next day at the board meeting. Those are fantastic. It’s a relaxed atmosphere, and you get a lot done.
John T. Chain Jr., 71
Chairman, Thomas Group Inc., Irving, Texas
ConAgra Foods, Northrop Grumman, Reynolds American
We need to continually remind CEOs to remember that they work for their shareholders. A CEO should imagine that shareholders are looking over his shoulder every time he signs a check.
Alan R. Weiler, 73
Chairman, Archer-Meek-Weiler Agency, Columbus, Ohio
Glimcher Realty Trust, ProCentury Corp.
Many CEOs could be more effective at succession planning. Also at communicating more often and more effectively, both within the company and with the board. In my experience, board consensus is the best way to steer a CEO. For example, one board on which I sit requested that at each board meeting the CEO do an in-depth review of one competitor and provide a series of metrics comparing his company to its top competitors. He was pleased to do so.
The bottom line is that when there is a broad consensus on the board for a change, and the reasons are explained to the CEO in terms of how this can make a good thing better rather than in a negative way, the best CEOs are almost always open to it. On the other hand, if a director is pushing an agenda that has little if any other board support, busy CEOs will usually—and generally for good reason—resist significant changes that require time and resources and provide minimal benefits.
Barbara T. Alexander, 57
Independent Consultant, Monarch Beach, California
Centex Corp., Freddie Mac, Harrah’s Entertainment
One CEO behavior I find quite annoying is speaking in first person: “I…I…I” rather than “we.” Even though everyone knows the CEO calls the final shots, he doesn’t need to convey that in his speech on a regular basis.
Travis W. Bain, 72
Chairman, Texas Custom Pools Inc., Plano, Texas
Atmos Energy Corp., Delta Industries
When a CEO has outside interests that seem to be too demanding, such as politics or serving on too many boards.
Norman C. Chambers, 57
President, COO, and Director, NCI Building Systems Inc., Houston
Not now but in the past, I’ve been on boards where I got the impression that the CEO thinks of the board as a necessary evil. You won’t be consulted beyond the boardroom. You’re kept up to date as much as is required, but not as much as you’d like.
Sanford L. Kane, 64
President, Kane Concepts Inc., New York City
Multi Fine-Line Electronics Inc.
A CEO glossing over problems is a pet peeve of mine. It also irritates me when executives don’t manage meeting time effectively. And I hate it when executives stand up and repeat material we received a week in advance of the board meeting. We’ve had a whole week to look at it.
John F. Reno, 67
Retired President and CEO, Dynatech Corp., Winchester, Massachusetts
Millipore Corp.
Grabbing the spotlight, being a “celebrity CEO,” the magic CEO who saves the day. CEOs who project themselves as being above everybody else or the sole cause of success at a company are inappropriate and annoying.
Timothy J. Parrott, 59
Chairman and CEO, On Stage Entertainment Inc., Las Vegas
Pinnacle Entertainment
CEOs can be afraid of owning up to mistakes. That’s why board members need to ask questions. When I was working with one company years ago, I was a presenter, not on the board, and was told what to say to the board even if I didn’t believe it.
G. Todd Marchant, 68
Retired Financial Planning Consultant, Grigsby & Smith Financial Services, Pittsfield, Massachusetts
United Financial Bancorp
