• William M Klepper
• Columbia Business School Publishing
• RRP: $54.95
The dynamic between company directors and the CEO is crucial part of an organisation’s success, as they share responsibility for driving it to success and profitability (or failure and legal action). But, sometimes, dysfunctional relationships between the two are due to factors that could have been quickly controlled and corrected, says executive educator William M Klepper.
One question that can be asked after the high-profile failure of Lehman Brothers during the global financial crisis is: where was the board? In the wake of this travesty, where board let its CEO linger on too long in power when all the signs were red flags, Klepper analyses the functions of boards – and when they should step in.
He spends some time on what he calls the ‘social contract’ that exists between the two, offering examples of successful credos that result in transparent and productive partnerships. Then comes the fun.
Tough love, says Klepper, is board’s job. You need to match the needs of the company with the right leadership, and if there isn’t match, the board needs to step in – and fast.
Behavioural styles are the key to knowing if the CEO has the right skills to manage this business at this time, he says. He argues that companies progress in stages and the driving and entrepreneurial styles of leadership that work for start-up may not be the right skills as company moves through an S-curve to ‘rising success’ stage, to growing (middle) stage, then on to peak success.
He uses case studies many will have heard of to illustrate the pitfalls of board complacency. At Coke, Doug Ivester was seen as natural successor to Roberto Goizueta, as his No 2, but no one realised their skills were complementary and they needed each other. The board was shocked to find Ivester wasn’t clone for his boss’ skills and had never been groomed for the job. He had to go.
At JetBlue, brilliant young founder David Neeleman rocketed his new airline into the US aviation stratosphere, but he realised his skills weren’t right to take the company to the next stage of growth and when the board confronted him about it, they jointly agreed he would be replaced as CEO.
Matching the organisation’s needs with the skills of the CEO is the key to successful board/CEO relationships, says Klepper.
He offers many useful insights in this brutally honest look at how boards should function.
