The New Director's chair
Directors Should Support the CEO, But There Are Times to Be “Very Curious.”
July 30, 2019
Directors Should Support the CEO, But There Are Times to Be “Very Curious.”
Fred Hassan has unusually deep experience as a leader, as the CEO of three pharmaceutical companies and the chairman of Bausch & Lomb. He is now a director of Warburg Pincus and serves on the boards of Amgen and Intrexon. He’s also been a director for more than 25 years, with both public companies and in private equity, and he shared his insights recently with me and my colleague, David Reimer, the CEO of Merryck & Co. Americas.
Reimer: What has changed over the years for directors?
Hassan: It was a little bit more of a social club in the mid-1990s. There was very little pressure on board members to perform. It was more about being able to get along with your board colleagues, and to get along with the CEO, who could ease out board members if they became difficult to manage. It wasn’t the board managing the CEO as much as the CEO managing the board.
So much has changed. Now you almost have to justify to the world that you deserve to be re-elected every year. It’s almost like running for office. That has created greater accountability to improve yourself as a board member every year. Every member has to get better at what they do while really remaining a subject matter expert in their particular area.
Reimer: What have been the key lessons?
Hassan: There are times when board members need to become very curious, and then there are times when board members need to not be disruptive.
In general, the CEO has to receive support from the board. The worst thing that can happen in a company is if the CEO is constantly looking over his or her shoulder and worrying about the board, as opposed to worrying about innovation and competition outside. Board members have to, by their very nature, be very supportive of the CEO and try to help the CEO succeed in their mission.
“The worst thing that can happen in a company is if the CEO is constantly looking over his or her shoulder.”
Generally, you should become more curious when you sense that there was an important trend that occurred and the CEO had not talked about it in executive session. Then you start wondering whether the CEO is watching the marketplace, whether they are aware that a new technology could hijack the company. You don’t want to be surprised.
You also have to know when to check your ego at the door. Some board members get very excited about moving into a certain market or they’ll get excited by the news about a competitor doing something or a politician making big noises about an issue. You can’t overreact and start taking up a lot of air time on narrow items.
Bryant: What are your best recommendations to CEOs about working with a board?
Hassan: CEOs can fall into the trap of being knowers rather than learners. That’s the way people around them often treat them. And that’s a shame because, in that situation, you’re no longer learning that much from the people who work with you or from others in your industry. And you’re really not learning much from your board if you keep telling the board your point of view. You have to keep an open mind.
CEOs should be very humble about their knowledge base, recognize that they don’t know what they don’t know, and find the people on the board who can help them and ask them questions offline and try to get real help. Don’t just treat board members as people who show up every three months and they’re happy with you or you’re happy with them and then they’re gone.
You don’t have to agree with the advice you get, but CEOs can really use board members more proactively than they generally are using them right now. And that builds more trust, too. So when things occur – and bad things do occur in every company – there’s a much better chance that the CEO will get support from the board.
Bryant: What makes a great chairman?
Hassan: The first thing is to have a strong relationship based on trust with the CEO and with the CFO. It’s more like a triangular relationship because the CFO knows a lot about what’s happening in the company.
Number two is to build harmony inside the board while allowing or encouraging open debate and the right allocation of time on various matters to avoid board meetings becoming overly structured or routine. You need to have a little flexibility in the agenda.
A good chairman should encourage people to get to know each other, but avoid the tendency to overdo the social stuff. There’s a law of diminishing returns in that area. And finally, I would say that, as a general rule, keep the time spent on presentations to less than 15 percent.
Slides should be sent ahead of time, and there should probably be no more than six to ten slides per subject, with one as a takeaway slide and one as a recommendation slide. The last rule would be that the chairman should not take up more than 15 percent of the board air time. It’s so easy for a chairman to get very verbose.
Reimer: A fair number of people who’ve worked for you have gone on to be CEOs elsewhere. If you think back over all the mentoring advice that you’ve given leaders over the years, what are the most common themes?
A. The most frequent advice I give to people is about how they are behaving as CEOs with their own management team. The job of the CEO is to bring out the best in their people, not only in terms of their willingness to give their best to the company, but also in setting high goals for themselves and actually believing they can achieve more than what they thought they would achieve. It’s about getting people to be more confident in themselves and having their sights raised as much as possible.
“It’s about getting people to be more confident in themselves and having their sights raised as much as possible.”
So when I see a CEO making excuses for their people or passing the blame to other areas and not taking ownership, I do pull the CEO aside and say, this is something that you need to work on with your people. Maybe you’re not setting your expectations high enough, or maybe the person doesn’t want to rise to the level you expect them to rise, but I’m sensing that there’s a bit of a disconnect here.
If there are one or two people who are just the bad luck members of the team, then it’s not very good for the overall team. Many times I do get some pushback, which is that maybe my sense of them isn’t quite right and the person is doing the very best they can under the circumstances. And I do accept the feedback. At least I raised my concern. My goal is to see if that eight-cylinder engine can run on the full eight cylinders.
Reimer: What is the role of the board in helping anticipate the strategic implications of disruption in their industry?
Hassan: I think that board members defer too much to the CEO on setting strategy. If they have questions, they should bring them up more quickly and be willing to debate with the CEO. In the end, the CEO has to set the strategy, but there should be healthy debate.
Bryant: How should boards get a feel for the culture of their company?
Hassan: Board members tend to get repeated exposure to selected, and often the same, staff people at board meetings. Directors should be talking to people in the layers below the CEO, especially to the operating people and to their teams, where the real stuff occurs. And if they’re not getting enough exposure to people at that level, the chairman should recommend to the CEO that that should occur – at least once a year, maybe more than once a year.
By the way, the chief HR person in some companies is hidden, and in other places they’re very helpful and very visible. I’m a strong believer that there should be as much visibility to the head of HR as the head of legal and the head of finance. Without good people resources, a company cannot compete very well.
And just the fact that the head of HR is being kept away from the board is by itself not a good sign about the culture in a company. I’ve been on a board where one of the weakest members of management was the head of HR and hardly got any time with the board. That company didn’t do very well long-term and that CEO had to be changed.
Bryant: Looking back over your long career, what is the most important leadership lesson you’ve learned?
Hassan: The biggest one really is mindfulness – knowing who you are, knowing what you know, knowing what you don’t know, knowing what you need to learn, knowing where you need allies, knowing where you need some functional experts around you.
And as I said earlier, one of the biggest syndromes I’ve noticed, for CEOs especially, is that the higher up they go, the more they tend to be the people who know a lot but don’t learn a lot anymore. And that lack of mindfulness is what starts to slow down people’s progress in their own growth and in their own careers.
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