Question

Consider board decisions like the mission, scope of services, corporate structure, and annual operating goals. What does the CEO contribute to those discussions? How does the board evaluate the CEO’s contribution? What makes the relationship effective, and what erodes the relationship? Griffith & White Well Managed healthcare

Answer 1

The industry sectors like hospitals have become increasingly professionalized, along with increased expectations on a CEO. In this context, the demands a CEO faces are multifaceted. For a successful CEO/Board relationship, they must be mutually sensitive to each other in taking up the responsibilities. In a profitable relationship, the strong partnership between the Chair of the Board and the CEO is a crucial element. Such a relationship will enable the organization to execute its strategy more effectively, successfully navigate a crisis and resolve any other multitude of issues that they encounter to achieve the purpose.

Key Components CEO/Board relationship.

Accountability

The CEO is accountable to the Board and the way in which these accountability roles are executed is crucial. The CEO should effectively report to the Board and keep it well informed of the functions of the organization. The balancing act of determining how much detail is given when reporting lies on the CEO. The consistent communication and cooperation in order to meet the ultimate accountability are essential.

Decision Making

The CEO is responsible for practically implementing the vision, mission, goal and policies, designed or created by the Board, and then reporting on operational outcomes. The CEO must make sure that everyone in the organization is aware of the agreed strategic direction, goals and policies in order to ensure everyone is heading in the same direction.

Policies

The CEO will provide policy suggestions for the Board’s consideration monitoring these organizational policies is the CEO’s responsibility.

Financial Reports

The annual financial reports or budgets for presentation to the Board for review and approval is prepared by the CEO. The CEO will suggest ideas and strategies on how performance can be improved. The Board will review, analyze and monitor the information presented by the CEO and all appropriate information will be gathered. The ultimate responsibility for the financial health of the organization is on the Board and which can be achieved with the cooperation of the CEO.

The relationship with the Board and CEO is complex and tense many a times. A healthy and professional relationship is crucial to the success of the organization. Both must work together to achieve the common organizational purpose. The ability of the organization to effectively respond to change will be hindered by the perceived ambivalence. For effective functioning of the CEO, she/he must be confident that decisions made will be supported by the Board. Effective communication from CEO, prompt response to reasonable requests for information will enhance the cooperation.

The oneness of a team must work for better obligation regardless of the size and type of the organization. The principles of teamwork like mutual respect, an understanding of one’s own contribution, an awareness and reasonable degree of tolerance of each other’s weaknesses and constraints and a sense of common purpose will strengthen the relationship.   

The Board’s obligations to the CEO:

• Effective compensation, benefits, and a working atmosphere that make the CEO’s position attractive to the best possible candidates
• Statement of performance goals
• Frequent and unbiased formal performance reviews
• Efficient informal feedback on job performance without criticism
• Rewards for tasks well done
• Efficient response to a request for guidance or assistance.

The CEO’s obligations to the Board:

• CEO must be committed to the organization’s mission and sensitive to the stakeholders.
• Responsible for the organizational and administrative tasks
• An effective leadership and decision-making that promote a productive working atmosphere and effective staff relations
• Efficient and prompt communication with the Board on financial and administrative matters
• Efficiently represent the organization in the community and enhance its image in a public
• Timely and prompt response to Board member’s requests for information.

A healthy, strong and productive relationship between the CEO and the Board will support improved corporate performance. Emphasis should be given to the mutual obligations in order to successfully reach a common organizational outcome.