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Boards should encourage candid communications
By Lauren | January 26, 2008
My recent posts have discussed CEOs’ responsibility to present bad news to their Boards fully and fairly. No discussion of that duty would be complete, though, without an examination of the complementary responsibilities of the Board. CEOs are much more likely to be fully candid if Board members create an environment where bad news can be safely delivered and discussed in a reasonable way.
We can only hope that the “imperial CEO” is going the way of the dodo bird, because companies function better when CEOs work collaboratively with staff, outside professional advisors and their Boards. CEOs are people too, though, and are as prone to insecurity as the rest of us. If a CEO believes that the Board will come unglued when presented with bad news, the CEO may not be able to resist the temptation to sugarcoat the message.
There have been many widely-publicized instances of CEOs acting unethically, and there will undoubtedly be many more. There have also been too many instances where Boards have passively accepted the pronouncements of imperial CEOs, abdicating their oversight responsibilities to the detriment of shareholders and employees. I would never encourage Board members to shirk their duties or ignore warning signs of misconduct by CEOs or other senior management. At the same time, the unethical CEO is the exception, not the rule. Boards are much more likely to get full disclosure from CEOs if they take a cordial tone and make it a point to question and collaborate rather than to accuse and blame. In an environment of mutual safety, candid communications and cooperative problem-solving are much more likely to occur.
Topics: Business Ethics, business communications |