What happens when a CEO loses faith in the board?

When a CEO, and their executive team, lose faith in their board of directors, it's a problem. Everyone in a business leadership role should know their company’s strategy. And by that same logic, everyone in corporate leadership should be able to recognise when a company’s strategy isn’t working. So, what happens when the CEO and their executive team feels the weak link is the board of directors? For starters, remember that this is an immensely tricky situation. Approach it carefully. Read more: Apple's board of directors fired CEO Steve Jobs in 1985. Why? Why would a CEO lose faith in the board? It’s always possible for the executive management and CEO to find conflict with a board. The problem is quite common and may be fixable with good communication. However, we’re talking here about something more than that. We’re talking about when the CEO believes that the board is not fit for purpose. In other words, they feel there can be no further progress until there is a change of board members. How can a boardroom get to this point? A skills shortage Perhaps management feels the board suffers from a skills shortage? Take the pandemic as an example; it forced many companies to shift their business online. If the board didn't have the right digital expertise to advise on company strategy, then an important business area is without a key leader. This could spook a CEO. Lack of engagement The CEO may feel that while the board has the expertise to turn strategy into results, it’s not using this expertise, and the company is suffering. This can occur if most - or all - directors stretch themselves too thin. For example, they may have other board roles or live too far away to make a meaningful contribution at each meeting. If the CEO feels their goals are being ignored, they will usually stand up and say something. Not being listened to Non-executive directors on a board usually keep a distance between themselves and the company’s day-to-day work. This is important for impartial judgement, but it can backfire in the form of a disconnect. If management consistently reports problems on the ground, and the board refuses to listen, this is a problem. Why would they refuse? They may think the problem is less critical than it actually is. Perhaps their focus on the company strategy blinds them to its urgency. Read more: The difference between a director and a non-executive director No accountability Board members should go through consistent evaluation, just like any company employee. Their progress should be assessed against company strategy and performance. If either doesn’t go well, then questions must be asked at the board level. If the CEO sees those questions remain unanswered, they might feel like a critical link in their leadership chain is broken. What should happen when a CEO loses faith in the board? Communication, reasonable judgements and humility - remember all three. Everyone has a role in this kind of impasse, from the CEO to the board. Of course, every situation will vary, but consider the following as a rough guide. If the CEO and management team feel the board is not helping achieve company strategy: The CEO should communicate this to the chair of the board. They should do so having spoken to other management so that they can present a complete and thought-out collection of feedback. The chair should acknowledge the criticism and convey the feedback to the board - if necessary, alongside the CEO. The board should self-assess and then flag the issues raised with the committee responsible for board roles, appointments and succession. Throughout this process, directors should remember to keep things professional. Having a management team doubt your capability can be daunting, and it’s easy to take things personally, but don’t. Strategy is the core focus, not personal records. If the above process produces recommendations for changes, they should be communicated to shareholders with clear reasoning and a blueprint for ‘how the change will make things better.’ Remember to keep a cool head Keep a cool head if your board is on the receiving end of criticism from the CEO. It represents nothing more than discordance, not a personal attack. Such criticism may be solved through discussion or one of two board changes, but ensure a consistent communication stream goes through the proper channels at the right time. To learn more about how boards work and the relationship between CEOs and the board, download the course brochure below.

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Diploma in Corporate Governance

Certified Company Secretary Professional

Diploma in Environmental, Social and Governance (ESG)

Technology & Governance for Boards

Company Secretary

Overview of Corporate Governance

AI Governance

CSRD Reporting

The director's challenge

Attend online and in-person events to get the practical skills and insights you need to make an impact as a leader.

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Masterclasses

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Insightful and thought-provoking content to help you become a great board director.

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Thought leadership

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What happens when a CEO loses faith in the board?

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