The challenges posed by the epic turbulence in the price of oil will highlight how effective the boards of directors of different companies are in providing meaningful guidance and counsel to their CEOs. The advisory role of the board is all the more essential because three decades ago, during the last upheaval of this magnitude, the current cohort of CEOs were only junior or middle managers. Little of what was successful for them then will help now that they must lead entire companies rather than merely manage a team as they did when they were more junior. Most CEOs thus find themselves in uncharted territory.
Based on my experience working with hundreds of boards and CEOs in a range of market environments, there are three essential things boards can do to help their CEOs in this uncertain time. And because many CEOs may not know to ask for them, boards need to take the lead and provide them proactively.
Increase interaction between chair and CEO. Boards should be sensitive to the fact that CEOs may subconsciously view the current environment as a “test” of their leadership ability, with any calls for help to be interpreted as weakness. Of course, the exact opposite is true: even in the C-Suite and boardroom, the survival of downturns is a team effort. Let the CEO know that if there is a test, it is of his or her readiness to draw on the experience and perspective of the board to find the best solution.
Hold up the mirror. Even the best leaders are human and can take on unflattering characteristics during periods of extended volatility. Watch for common leadership styles that derail CEOs: leading by decree, having unrealistic performance expectations, or only taking a short-term view. Provide empathetic but firm feedback to help the CEO continue to be his or her best self.
Don’t let the crisis go to waste. It’s been said that experience is a harsh teacher because it gives the test first and the lesson afterward. In the same way, the current turbulence serves as an unforgiving but highly effective finishing school for future CEO candidates. Both the board and the CEO have a vested interest in leveraging this reality. Make sure the CEO draws upon his or her team, letting them hash out possible approaches. The CEO’s job isn’t to solve the problems solo, but create the environment of discussion and creative tension that leads to innovative solutions. Every person involved will become a better leader because of it.
From activist investors to ongoing regulatory scrutiny, energy company boards have their own challenges. In the current environment, however, the board’s number one priority needs to be giving their CEO the guidance and care needed to be the leader this dynamic period demands.
Steve Goodman, based in Houston, leads Egon Zehnder’s Energy Practice in North America, serving clients across all energy segments, and he is active in the firm’s Private Equity Practice. He has a major focus on CEO and board placements along with succession planning and board effectiveness consulting.
As a philanthropist, mentor or family member, you probably support and affirm the efforts of many people every day—sustaining people in crisis, shelling out scholarship funds, listening to a brother in need, or applauding tiny grandchildren. Now, NACD is asking you to add a board member or two to your list and make someone’s day by nominating them for the NACD Director of the Year or B. Kenneth West Lifetime Achievement Award.
Don’t think these boardroom leaders won’t thank you. Every person on earth likes recognition for a job well done and appreciates an “attaboy/attagirl” when times are tough. When we are young, we typically receive praise from parents and teachers, and when we join the workforce exceptional performance can be rewarded by “hero-grams” from the boss and a welcome check at bonus time. Then we reach a stage in life when it seems that doling out the pats on the head, the slaps on the back and the big bucks falls to us. And, when you are the chairman of the board, everyone looks to you for validation, celebration and reward. Truly, it can be tough at the top.
The nature of effective board work means that most of it is unseen: the quiet word, the guiding thought and the patient phone calls seeking unity, collaboration and progress. The best in the boardroom spend hundreds of extra hours before board meetings, learning to know the company, the industry and the environment. They sublimate their egos, know when to speak up and when to stay silent, and match their judgment with maturity and integrity. Sure, many of them will have had high-profile and rewarding careers, but the last couple of years have been challenging for directors with high standards and a little love from you can’t hurt. Go on: Bestow the Glow.
To nominate a director you admire for one of the two NACD awards which will be presented at a Gala dinner at the Waldorf Astoria, New York, on Tuesday, November 8, 2011, please fill in the nomination form and supply at least three letters in support of your nominee. You can download the form and check all the details here. Nominations close on May 31 and an independent selection panel will announce the winners in early summer 2011.
The Director of the Year honorees and the D100 honorees will be celebrated at the NACD Directorship Forum, November 8-9, in New York. Register here. You will have an opportunity to nominate directors, executives and governance experts for the D100 later this spring.
NACD Director of the Year Winners 2010
B. Kenneth West Lifetime Achievement Award Honoree
Public Company Director of the Year Award Honoree
Nonprofit Director of the Year Honoree
Curtis J. Crawford, PhD,
Director of ON Semiconductor, E.I. Dupont DeNemours, and ITT Corporation
Director Zebra Technologies, Chairman Emeritus of W.W. Grainger and Director, Principal Financial Group
Managing Director Bain Capital, Co-Chair of Board of New Profit, Board of Dana Farber Cancer Institute, City Year, Horizons for Homeless Children and New Leaders for New Schools