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Just Ask Zac 1

Many people have short governance queries, which our new column attempts to answer – if you have any questions for Zac Zahner our CEO please send them in to – Just Ask Zac – advisors@effectivegovernance.com.au

Just Ask Zac LogoWendy from Parkside in South Australia asks: Zac, as a CEO, I am having trouble communicating with my Board. While my Chair and I have a good relationship, it seems that others on the board either don’t believe what I am saying or query my decisions. What would you suggest I do before the situation turns toxic?

Hi Wendy – We commonly see an area of tension between the board and management, which can be viewed in a number of ways. This occurs due to the overarching role of the board to monitor the CEO and through them the senior management team. While some tension may be considered a good thing, as it keeps both sides on their toes so to speak, it is vital that the board and management relationship is built on trust and honesty. Clear, respectful communication between all parties is vital in building this relationship. In many cases, I have seen a breakdown in communication leading to a poor outcome for both the CEO and board – and generally it is the CEO who comes off worse for the experience. Questions should be welcomed and responses either given during the meeting or, if the information is unavailable at the time, after the meeting. Don’t be offended by questions, although if you feel they were not asked in the correct spirit, then speak to the chair or the director concerned after the meeting to see if there is an issue you are unaware of. It is never a good idea to make your relationship with the board combative, it is best to use the board as a resource to assist you in leading your organisation to success.

Malcolm from Toowong in Queensland asks: I am a director of a not-for-profit organisation where the CEO creates the strategy, mission, vision and values independent of the board and presents it to us for approval. While we appreciate the CEO’s efforts, we as a board expect more involvement in developing the strategy. Do you have some advice on how involved the board should be?

Malcolm, good governance dictates that setting the overarching strategy of the organisation lies with the board. The board is also responsible for making sure the strategy remains on track and is still valid. The level to which a board gets involved in strategy is different for each organisation, some boards are very hands on and others less so, but fact remains that the board must approve the strategy and the board has the responsibility to set the organisation’s strategic direction. Can I suggest that your best course of action is to put a strategy day in the board’s calendar and organise a strategy workshop where you can become more active in setting the strategy and determining its validity. It should be noted that to set the strategy the board should do so in conjunction with the CEO and senior management team. You as a board can then set the overarching direction and key strategies and then hand it over to the CEO and management team to work out the details for board approval. Importantly, there should be clear performance indicators against which the board can measure the implementation of the strategies over the year.