Platt Perspective on Business and Technology

Joining, serving on and leading a board of directors – 16: vetting and interviewing, hiring and managing a prospective CEO – 3

Posted in job search and career development by Timothy Platt on October 17, 2011

This is my sixteenth installment in a series on joining, serving on and leading a board of directors (see my Guide to Effective Job Search and Career Development – 2, postings 179-193) and it is also my third to deal with the intricacies of advising, supervising and managing a CEO. And I start this as a continuation of Part 15: vetting and interviewing, hiring and managing a prospective CEO – 2 and with a working assumption that there are issues involving the CEO and their senior executive team that rise to the level of severity and importance so as to call for board action. Operationally, this means one or more board members have evidence in front of them suggesting that the CEO of the organization they are on the board for, has failed to conduct themselves effectively or even adequately as a senior executive and representative of the organization.

• My goal in this posting is to at least briefly outline some of the considerations that go into determining, understanding, weighing and acting upon such evidence.
• Any time a board or its members face a potential conflict with the CEO or their senior executives, this becomes a significant due diligence matter for them as well as for the organization they are board to.
• This means following clearly stated and consistent policy, and without short cuts or deviation – this is a situation where ad hoc spells disaster.
• And this is a situation where corporate council needs to be consulted, and if concerns involve the person of the corporate council for that organization the board needs to consult with outside council. There, they have to make sure that they select someone for whom there would be no conflict of interest concerns for that organization or with regard to any of the people or circumstances likely to come up.

Start with the evidence, and with knowing:

• What it says,
• Where it came from and what biases or other limitations it may be encumbered with,
• What gaps or inconsistencies it might include in understanding a full story of the issues under consideration.

As a worst case what charges or accusations might be made against the CEO and/or members of their direct-report senior executive team?

What mitigating circumstances or other factors might be in place that have to be taken into account?

How serious is this for the organization, and what risks does this create? Obviously, any real suggestion of illegality has to be considered to be very serious in this context, as does any evidence that the CEO or a member of their executive team have knowingly acted in calculated bad faith with regard to the integrity or the marketplace viability of the organization. And this becomes a direct issue for the CEO as well as for any non-CEO CXO who may be involved if evidence suggests that the CEO has to have known about improper CXO behavior, or if the evidence of such behavior was so glaring and apparent that any reasonable person would have to conclude that there was cause for concern and action.

Beyond that level of evidence is a second level that would also serve as ground for action by the board. That is where a CEO and their senior executive team plan and execute with good intention towards the organization, and I add towards their customers and marketplace – but they do so with such consistent and systematic ineffectiveness as to cause damage to the organization.

• This can mean significant damage to its good name and reputation.
• This can mean significant damage to its market share or valuation or to its long term strategic prospects.
• The core requirement here is that this is not simply a single, self-limiting event or circumstance that can simply be used as a learning curve opportunity, and it is not an event or circumstances that has developed for reasons that the CEO and their senior executive team would have no reason to know of or anticipate. This has to be a problem that they brought about, and as a result of ongoing planning and practice on their part.

Weighing the evidence comes next and then taking action and this is where mitigating factors and other considerations have to be taken into account, as well as both the short term and immediate, and the long term interests of the organization. I am going to turn to these issues next as a part 17 in this series.

I have been posting on the general topic area of jobs and careers to my Guide to Effective Job Search and Career Development directory. I have recently started a second, continuation page to that directory at Guide to Effective Job Search and Career Development – 2 and you will be able to find this and subsequent series on jobs and careers there.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: