Imagine that you are having a quick lunch by yourself in a crowded café. Seated at a table next to yours are two men in heated debate that is animated to put it mildly. You can’t avoid being distracted by their conversation, particularly when you hear the words “board chair” in the conversation. At that point you actually start listening. One says to the other, “I don’t report to you. I report to the board.”
“Yes,” the other replies, “but you report to the board through the chair.” “I will continue to report directly to the board,” comes the reply. They are actually debating the flow of authority from the board to the CEO and the accountability back to the board. Imagine that. It doesn’t sound like a happy relationship.
At that point you begin to think of your own situation. You are the chair of a not-for-profit organisation or NGO, and you begin to wonder, “To whom does the CEO report?”
To solve this debate we must first understand the relationship between the chair and the board. The chair is the chief servant of the board, not the most powerful member of the board. The chair’s primary role is to lead the process of governance, not to supervise management. Stated another way, the chair’s focus is on the board and its decision making process, not on the CEO and her/his leadership and management of the staff.
The delegation of authority and responsibility from the board to the CEO should be expressed in the job description of the CEO. That job description should be part of the Board Governance Manual. The specific direction that delegation takes is expressed in the Strategic Plan, which is also part of the Governance Manual. It is also possible that authority from the board to the CEO may be contained in a specific motion passed by the board, although this should not normally be necessary. In other words the authority of the board flows to the CEO in the form of written statements, not spoken directives from the chair or any other individual or committee.
All authority has limitations associated with it. The authority that the board delegates to the CEO is no exception. Words like “limits”, “boundaries”, “constraints”, “parameters” are used to describe these limitations to authority. In the Relationship Model these limitations are stated in the negative, like the Ten Commandments, and serve to define the Circle of Freedom that the board gives to the CEO to fulfill his/her responsibility.
Accountability flows directly back to the board, not to the chair, not through the chair. The accountability process should also be defined in the Board Governance Manual. The process includes the same two components that are contained in the delegation of authority and responsibility. First, there should be a process of annual review of the strategic results of the organization and the tactical goals of the CEO in his/her annual performance review. Second, the Governance Manual should define the times and details of monitoring the policies that limit the authority of the CEO to ensure that the CEO stays within her/his Circle of Freedom.
When these processes are in place and practiced, there is no need for supervision or direction, authorizing or monitoring of the CEO by the Chair.
The chair and the CEO are peers. One focuses on the governance process, the other focuses on the management process. Each has a specific role within the organization. Authority and responsibility do not flow from one to the other. Nor does accountability flow from one to the other.
The Relationship Model, summarized (here), is designed to define all of the direct working relationships between the stakeholders and the board, the internal board relationships and the relationship between the board and the CEO. Direct working relationships are defined as relationships where authority and responsibility flow from one to the other and where accountability is mutual, flowing in both directions. The relationship between the chair and the CEO is an indirect working relationship. It is a very important one, but one that will work smoothly only when it is defined carefully and understood in the same way by the board, the chair and the CEO.
Any comments? Let me know what questions this raises in your mind as you think of how to apply these principles in your organization.