Five Ways to Destroy the Relationship between the Board Chair and the CEO

Smooth cooperation between the Board Chair and the CEO of a limited company is one of the most important factors for a company's success. A competent board with its Chair is responsible for the company's strategic direction and leadership at the strategic level of the organization, while a skilled CEO ensures the implementation of the strategy and manages the operational organization. This division of labor is critical because without clear roles and responsibilities, the company's management can fall into conflict.

Here are five effective ways to undermine trust and cooperation between the Chair and the CEO:

1. Role confusion

Board Chairs often come from a background as CEOs. This brings value, but also risks. A Chair with a CEO background must be clear that they are not acting as the company's CEO but as its Chair. Otherwise, the Chair will inevitably step on the CEO's toes. Mika Sutinen, who has chaired over 10 interesting companies, noted in our discussion that if there is even a hint of a passion for CEO duties, chairmanship is entirely the wrong role.

2. Distance

In leadership meetings, the frequency of interactions is more important than their quality, as Marcus Buckingham writes in his book Love + Work. This applies to meetings between the CEO and the Chair as well. To build trust and ensure that the CEO and Chair are attuned to each other's thinking, there needs to be active communication every week, sometimes even daily.

3. Lack of transparency

A good CEO openly discusses problems observed rather than just selling and marketing the company to the Board. As Jorma Ollila pointed out to a CEO in a board meeting, good meetings don't just present problems but also offer solutions.

4. Abuse of power

If either the Chair or the CEO abuses their power or tries to dominate the other, it can lead to serious conflicts. If the Chair makes decisions that belong to the CEO, or if the CEO acts behind the Chair's back, it can destroy trust and cooperation. This has even occurred in publicly traded companies.

5. Lack of positive feedback

CEOs rarely receive positive feedback from their organization or customers. A skilled Chair does not hesitate to challenge the CEO in professional discussions but remembers that one of the board's most important roles is to support the chosen CEO. Quoting Jorma Eloranta: CEOs can withstand incredible amounts of criticism without batting an eye.

This text was published in the Finnish language in Kauppalehti on 22 May 2024.