How much sway should a CEO have? – a dilemma

Posted on 06/27/2012 | Written by Julie Garland McLellan

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Nagachandra is a director on the board of a not-for-profit company. The CEO has a board seat. This position was argued against by the former chairman but other board members prevailed saying that the CEO was firstly responsible and trustworthy and secondly more knowledgeable about the operations than any non-executive director could ever hope to be. At that time Nagachandra had felt comforted by the idea that the CEO shared the same legal obligations as the directors. Immediately after the election of the CEO the former chairman resigned and was replaced by long serving board member. The CEO played a more active role to help the new chairman get settled in.

The current chairman has just indicated to Nagachandra that she would like to step down from the role as it is a big impost on her time. She believes that Nagachandra would make a good successor and wants to forward his nomination to the board and, ultimately, the membership for voting in at the next AGM.

Nagachandra has reflected deeply on the role of the chairman and has thought about the personal dynamics and quality of discussions at recent board meetings. He has reached the conclusion that the CEO exerts a very strong influence over the board and that this reduces the Chairman’s role to a ceremonial and procedural one. He is not sure how either the CEO or the board would react if he started to put in place processes to limit the CEO’s influence in the boardroom. He is also not entirely sure that the current situation is harmful to the interests of the organisation although it is not currently considered good governance.

What should Nagachandra do?

Many readers of this blog will be familiar with my newsletter The Director’s Dilemma. This newsletter features a real life case study with expert responses containing advice for the protagonist. Many readers of this blog are practicing experts and have valuable advice to offer so, for the first time, we are posting an unpublished case study and inviting YOU to respond.

If you would like to publish your advice on this topic in a global company directors’ newsletter please respond to the dilemma above with approximately 250 words of advice for Nagachandra. Back issues of the newsletter are available at http://www.mclellan.com.au/newsletter.html where you can check out the format and quality.

The newsletters will be compiled into a book. If your advice relates to a legal jurisdiction, the readers will be sophisticated enough to extract the underlying principles and seek detailed legal advice in their own jurisdiction. The first volume of newsletters is published and available at http://www.amazon.com/Dilemmas-Practical-Studies-Company-Directors/dp/1449921965/ref=sr_1_1?ie=UTF8&qid=1321912637&sr=8-1

What would you advise?

Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance. See her website atwww.mclellan.com.au or visit her author page athttp://www.amazon.com/Julie-Garland-McLellan/e/B003A3KPUO

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