Build the Trust Foundation

Boards and CEOs should purposefully define roles, responsibilities, expectations, and structures to create a solid foundation for a trust-based board-CEO relationship. Board leaders play a pivotal role in building this foundation, which strengthens collaboration, alignment on priorities, and mutual respect.

Recommendation 1: Delineate board and CEO roles and responsibilities to anchor a strong relationship.

The Commission identified role ambiguity as a common disruptor to the board-CEO relationship, finding that it often surfaces early in the CEO’s tenure. Today’s increasingly fast-paced and uncertain business environment presents a greater chance that directors may overstep into management’s purview, drawing on their current or past experiences as operators to assure themselves that the company is responding adequately to challenges. This is not always a healthy dynamic, as it can undermine the CEO and create confusion around governance boundaries.

ACTIONS FOR THE BOARD

Define and document a clear delegation of authority to management.

Ultimate accountability for managing the affairs of a corporation rests with the board, and the board has broad discretion to delegate authority. In the typical corporate governance model, the board delegates the management of the company to the company’s officers, under the leadership of the CEO. Determining which responsibilities to delegate to management and which to reserve for the board requires careful consideration, clarity, and ongoing attention.