Should the CEO Serve on a NFP Board?

The CEO Serving, or not, on the Board of the organisation they are heading up is a question that can raise the hackles of many a Director. Strong opinions sit on either side of this question.

I’m going to say up front that my personal belief is that the CEO must be present at Board Meetings. In my mind, the only question up for debate is what form that presence takes.

The main objections to a CEO sitting on a Board include:

• The possibility of real, or perceived, conflicts of Interest – i.e. the CEO being involved in decisions that have a direct impact on the CEO.

• Concerns about the loss of accountability of both the CEO (from the Board) and of the Board (from the CEO);

• The loss of the distinction between a Boards role of oversight and a CEO’s role of execution/operation.

The advantages of the CEO’s presence in Board meetings include:

• Direct operational input for informed decision making;

• Opportunities for immediate response for Board questions posed to the CEO;

• Identification of possible operational impacts of Board decisions, and the ability to mitigate negative impacts before they eventuate;

• Feedback about operational stakeholders who the Board many not have sufficient understanding of (there is a need to be careful with this feedback as it could be skewed with the CEO’s bias).

• Faster, timelier, decisions from the Board.

The measures that can be used to mitigate the risks of the CEO sitting on a Board include:

• The CEO being on the Board in an advisory capacity only, and therefore being unable to vote;

• As with any Director, any conflicts of interest should be identified at the start of the meeting, and the Board deciding if the CEO should participate, be present but not participate, or be absent from the meeting for those conversation/decisions.

• Boards allocating parts of meetings to discuss issues concerning the CEO, their performance, their role and their accountabilities, where the CEO is no present.

• The Board Chair having a good understanding of the distinctions between the Boards Governance role, and the CEO’s operational role, and chairing meetings to ensure these lines are not blurred.

The measures above go a long way to mitigating the risk of a CEO sitting on a Board, and that the advantages gained by having the CEO present far outweigh any remaining risk.

Note: There may be constitutional or legal constraints preventing a CEO participating on a Board in your organisation. These need to be investigated prior to making any changes to any Board structure.

As always I’d love to hear your feedback.

If this is an area in which TakeControl Solutions may be of assistance to your organisation please do not hesitate to contact me.

Dwayne Wescombe

Managing Director – TakeControl Solutions