Candor and control in the boardroom

 

Great CEOs think “outside the control box.” Many directors, even the most conscientious and hardheaded, will welcome a nonadversarial game change.

A few years ago, Nate Witherspoon, the nonexecutive chairman of Laidlaw Cement, called me to arrange a meeting, a private luncheon he hosted at his midtown Manhattan club.

As it turned out, Nate and his board were concerned about the performance of their CEO, Av Wolsley, who had held the job for about two years. Laidlaw had recruited Av from the outside. As Nate revealed the board's concerns, I was impressed by his calm, articulate, and objective assessment of a puzzling situation. In Nate's own words:

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“Something is going on in Laidlaw that's not quite right and I'm concerned over our possible consequences. I can't quite put my finger on it, though.

“Our top management team is dysfunctional. We could just fire Av and hope someone new will straighten it out. But there are problems with that: We'd have to pay Av a big severance package. We'd mount an expensive and time-consuming search for his replacement and lose time. A new CEO will cost us a third more, and he might not succeed either. He'll terminate at least two or three top people before we even know if he's any good. That will require more costly severance packages, and we'll have to conduct more expensive searches for their replacements; they'll each cost us a third more. Finally, if Av's replacement's not good, we have to start over. I figure this will all cost us perhaps 15-20 times Av's current package.

“I like Av a lot, and there's no question in my mind that he's loaded with talent and has the kind of strength I like in somebody with his kind of responsibility. My feeling, shared by a couple of our directors, is that we ought to retain somebody like you to work with Av and the team to uncover the real problems and address them quickly. Could you do a little detective work and maybe such coaching?”

The CEO was alright

I took the assignment. To make a long story short, I met and interviewed all members of top management and some board members. I agreed with Witherspoon's assessment of Av Wolsley's talent and suitability for the job, a view I shared with the whole board. Av, I agreed, was a winner, and just needed a little support building his interpersonal skills and making some difficult organizational decisions. In particular, he needed to deal with a couple of executives on the team who feared change and blocked innovative initiatives by a talented subordinate who represented the future of the business. Although Av knew this, he had delayed taking action for so long he worried that he looked weak to people who also recognized the problem.

Why had he tolerated this situation so long? Since more delay could only add to others' negative perception, I urged Av to solve the problem immediately. He did, sending the executives on their way humanely and generously, thereby signaling his strength. After he promoted two of the younger, innovative managers to fill their shoes, we embarked on a teambuilding project for the whole team. In fairly short order, the board came to appreciate Av's talent and have stepped up their support for their CEO.

For his part, Nate Witherspoon, a model nonexecutive chairman, has forged a strong, candid relationship with Av that has spread across the boundary between board and team with remarkable financial results and customer satisfaction. It all happened because Nate, the board, Av and the executive team shunned control and embraced collaboration.

Look for ‘collaborators'

To succeed in the current corporate climate, more boards and CEOs are accepting the fact that they cannot achieve admirable performance through control. Control blocks the sort of candor, goodwill, and trust that enables all to help each other out when their organizations face inevitable crises.

Control breeds adversarial relationships, and adversaries breed escalating conflict. Collaboration resolves conflict and builds respectful bonds — and respectful bonds breed peak performance.

Given this fact of corporate life in the new era, board members should be chosen for a track record of collaboration, not solely for their titles, awards, and participation in the “old boy network.” Apply this principle to your own formal and informal boards. Bring onto your board people who can collaborate with you on your growth and development as an executive. Don't rely too much on high-status powerful people, and minimize your inclusion of friends and family.

The same holds true for boards searching for a new CEO, for a CEO searching for new top-team members, and for any executive looking to promote prime prospects from among a crop of high-potential subordinates — from the greenest recruit from Wharton to the most seasoned veteran on the sales force.

In the previous era of management, executives thought control not only gave them power but reduced the pressure that comes with the top job. Ironically, however, collaboration, not control, lessens the pressure on you, and makes you easier on yourself and everyone around you. People enjoy your company more than they would if you constantly try to keep them under your thumb, and they appreciate your talent more when you act like a teammate rather than a dictator. Results improve and morale soars. Your top team feels safe with you because they now know where you stand; and they, too, grow more candid. The board finds you a guiding light, not an obstructionist, and revels in the fact that you honestly seek their ideas and trust their judgment.

Bestow and receive trust

If those around you always tell you what they think you want to hear or praise everything you do unconditionally, you'll not only cease growing professionally and personally, you'll run the risk of letting your dark side expand at the expense of your bright side. Demand candor, promising that you'll accept it without anger or retribution. Provide candor yourself. Do this, and you'll both bestow and receive trust.

Consider this brief example that illustrates the positive shift taking place between today's boards and top teams.

A client I'll call Neal Farley is CEO of Halsey-Frickert, a New England heavy manufacturing company. Recently, he shared his views with me on working with his board: “Basically, the board's job is to stop me from going where I don't want to go.”

Apparently, that appealed to the board because they take their jobs as skeptics to heart.

“Not only do I not mind,” Farley continues, “I appreciate their doing their homework to really critique some of my ideas that would be big investments financially and a redirection of the workforce away from what we think of as tried and true. We're in a mature business and we have to find and fund new avenues.”

This attitude has won Neal a reputation in the industry as a “wild hare,” a somewhat overstated way to describe his penchant for risk. The board helps restrain that penchant at times.

“When the board shoots down an idea that the team and I have worked up carefully, we usually see the wisdom in their counterposition. After all, we have some real winners on our board who know their stuff, and that's what I mean when I say they stop me from going where I don't want to go.”

A director ‘over the edge'

On one occasion, though, Neal needed to provide similar candor to one of the company's new directors. “At a meeting when four of our top team and I presented a projected new plant in Arizona, this fellow would ask questions meant to challenge our assumptions. That's good, but this time there was just too much edge to them. He looked around the table two or three times that afternoon and said, ‘My job is to keep Neal honest.' I accept that, but it has to work both ways. In this case we challenged him, and all the other directors bought in on our capital investment. We've gone ahead with the program and it has turned out really well.” Candor engendered trust. Trust engendered candor.

After the meeting, Neal and his four associates discussed the meeting and asked their lead director what he thought. The director said he would speak with the new member to let him know his behavior, if not his intention, had gone over the edge. “I said I appreciated his support, but I'm the one who asked to be stopped from going where I don't want to go, and I'd like to meet with him personally to clarify what I mean by that and what I consider the ground rules for candor and trust.”

Neal set up a breakfast date with the new director the following week. “I told him that his comments rankled me and that I'd appreciate it if we could just get better acquainted so he could share with me where he was coming from. He said he'd given thought to his actions because he sensed he offended not only the team but also his fellow directors. He said he appreciated the feedback and looked forward to our next “strategy dust-up.”

Long story short, that episode took place three years ago, and now the new director has become the board's lead director and has played a vital role keeping Neal from going where he doesn't want to go. As for Neal, he proved himself a master catalyst in the new era.                                                          â– 

The author can be contacted at allan@allancox.com.

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