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Sunday, 14 July 2019

Running a Dysfunctional Board? It May Need Surgery!

It is always rewarding when kind readers take time out to comment on Ivan’s Blog especially when the feedback is positive.  The reward is enhanced when the feedback is posted by an old friend and colleague from Vistage. 

Last week’s post brought forth quite a list of interested comments largely about various issues resulting from some unconsidered consequences of thoughtless decisions.    In particular two of them related to the leadership of charities and from the appointment of a “hired gun” in place of perhaps a family member. 

Let’s examine the position of a charity CEO.  On the face of it the CEO is running a relatively conventional and indeed commercial organisation. Some obvious differences would be the weight of regulation, the need for very high quality marketing and lead generation together with an organisational structure designed for the sector (highest possible integrity, for example). 

It is this structure that tends to cause the most issues. Typically in the UK, Housing Associations are structured as charities and that implies that leadership can seem to be a split responsibility.  An average HA would have a CEO, Finance Director and probably a Director of Fund-Raising and occasionally other specialists. These are the executive team and they normally report to a non-Executive Board of Trustees led by an equally non-executive Chair. 

So far, so good.  The problem arises in the definition of the roles and responsibilities of each sector of the leadership. I had a typical CEO as a consultancy client and his life was continually frustrated by the Chair who had a high opinion of his own leadership qualities especially operational. 

I suggested that the CEO start at the root cause and that was the relaxation of rules that allowed almost at-will growth in the number of Trustees and that had reached sixteen.  In addition the Trustees were flexing their muscles and were setting up small operational committees to which the executives were expected to report. 

It needed root and branch reorganisation because it had got out of hand but turkeys don’t normally vote for Christmas.   In the fullness of time the situation was corrected with appropriate surgery but it took time and patience to achieve it.  It answered the Florence Nightingale question: “Who is in charge here?” 

In the other leadership issue the problem arises through a dysfunctional situation at Board level.  The rationale for the appointment of a professional leader is, in many cases, obvious. For example a family business has run out of what even the family consider to be suitable talent for the role and even worse, while there are young and talented people in the business, they are considered to be as yet unready for promotion. 

An obvious solution is to scour the market and find someone with the experience and skills to take on the task. It would be more obvious and far more sensible to find someone with an attitude and behaviour dedicated to an understanding of the possible ramifications of the appointment. 

The real issue here is emotion. If a business has been run in the family perhaps for a couple of generations then the pain of bringing in someone without  that bond on to the Board and expect them to achieve change without trauma is foolish, not to say reckless. 

Again I have had several instances of highly qualified people being appointed to the leadership of a family owned business in an effort to maintain control.  The normal route is to offer a small block of equity to the incoming executive with the promise (!) of more as the business develops. 

Call me a cynic but in all the years that I have been with Vistage I can’t recall a single successful instance of an incoming CEO being given or even sold a majority stake in the business. 

Emotions run high, factions emerge and office politics reign supreme. Perhaps the best solution is to prepare the business for sale and when it happens, walk away without a backward glance  (and that I have seen, several times). 

Above all, never lure people into the business with vague promises.  If an applicant is rated as suitable after a comprehensive assessment of their abilities, then keep your word (it’s integrity again)

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