Together at the top

If you missed the Together at the Top session at the 2023 IoD Leadership Conference, we’ve captured some key themes and insights from the session and outline a few specific actions for directors and boards arising from it. The practical lessons and action steps for board members were:- ensuring full transparency with the CEO.

- developing a high level of trust is the key with the CEO.

- constant communication and “doing what you say you will do”, builds trust.

- a relationship built on trust and transparency, will help reduce conflict at board meetings.

- avoid becoming a board of two – respect separate roles of governance and management.

- share information – from directors to CEO, and vice versa.

- “panic slowly” Boards must be fully informed before it can make decisions.

This conference outtake highlights key themes and insights from the Together at the Top session on the relationship between the board chair and the CEO. The session featured Dame Therese Walsh (chair) and Greg Foran (CEO) of Air New Zealand. The panellists discussed what a good relationship between the chair and the CEO may look like based on their experience leading Air New Zealand during the pandemic. 

This session brought to life the Four Pillars of Governance Best Practice.

Section 2.1.4 of the Four Pillars states that “the relationship between the board and management is an ongoing dynamic. Good practice means the relationship is governed by separation of powers and mutual confidence. It is important to respect the different roles of board and management, and ensure boundaries are clear”.

Section  2.12.5 outlines the importance of the relationship between the chair and CEO, noting that the chair “must work closely with the CEO but maintain a relationship of healthy professional distance“ and that a “combination of a chair and CEO in lockstep can be a significant force but if the roles are too close a board may find itself inadvertently (or deliberately) excluded from meaningful decision-making”.

Both panellists provided examples from Air NZ that highlighted the importance of this working relationship.

Panic slowly

Greg Foran started as the CEO of Air New Zealand just as the pandemic reached Aotearoa New Zealand. In this very turbulent time, Greg recalled heeding the advice of pilots to “panic slowly”. He adopted this approach with both the leadership team and the board. At the time it was very difficult to make decisions with so many unknowns. Greg stressed the importance of not being forced to make decisions without enough information, and of being completely transparent on these decisions with the chair and board.

Ensure full transparency

Both panellists stressed the importance of full transparency in CEO and board decision making. Further, the time for the new CEO to develop a relationship with the board/chair had to be accelerated. There wasn’t time to slowly get to know one another as the company had a less than a month before it would be unable to continue trading – the CEO was given 30 days to shut the company down.

Build trust

With increased transparency came more trust. Building trust between the chair and CEO was key to managing the crisis – with the CEO and chair working together, not trying to manage each other. Trust was further enhanced when each of them did what they said they would do.

Communication

In a time of crisis, constant communication is critical. Both panellists agreed on the need to communicate frequently. They held early morning conversations with other regular conversations throughout the day.

What interested directors at the conference?

Some of the questions the audience asked during the session are addressed below.

How did things change when the crisis abated?

Greg and Therese said communications during the pandemic set a good cadence for how they have continued their relationship – albeit with less frequent communication. Daily meetings are now reduced to fortnightly, for example.

There was an acknowledgement from the panellists that if the chair and CEO relationship doesn’t work, nothing else will.

How do you respect the governance vs management divide?

Both panellists again emphasised the importance of transparency, especially around the disclosure of information. While directors may provide feedback to the CEO/management, they need to be careful about not going too far into operational matters.

How should chairs and CEOs deal with conflict?

Managing conflict also came back to communication and transparency. This meant ensuring that matters were discussed in advance of board meetings - a ‘no surprises’ approach. They agreed that when sharing information it is best to ensure everything is covered.

How do you ensure that you do not become a board of two?

The board is the decision making unit – not the chair. It is vital not to lose sight of the fact that the board makes decisions. It is important that the CEO and chair not be in conflict. otherwise conversations will not move forward. It’s also important to have “board only” time. This allows an opportunity for the board to discuss major issues and how they would resolve them. It also allows the CEO some time out from board discussions.

When was the last time you changed each other’s mind?

Greg and Therese agreed that they have a high level of trust and confidence in each other, so they often change each other’s minds. It is important to respect the other person’s view and be able to determine intuitively issues that may require further discussion. They also suggested beginning the decision-making process early on through regular exchanges of information. This will hopefully lead to easier decision making once issues reach the board.

2024 Leadership Conference

If you’d like to access more of these kinds of insights from leading directors from New Zealand and Internationally, join us in Ōtautahi Christchurch 13-14 May 2024 for thought-provoking content, inspiring discussions and the opportunity to expand your network within the governance community.  Registrations are now open.