We recently learned about an organisation where a key staff member, under a performance management process (let’s call him the complainant), contacted a board member to pass on his, and allegedly other staff members’, complaints about the Chief Executive. That board member, without consulting the board or even the chair, conducted her own enquiry into the matter (let’s call her ‘the detective’). This involved interviews with a small number of staff members who were directed to her by the complainant.
The detective’s investigation only became known to the board after the Chief Executive informed it that, following a thorough six-month performance management process, the complainant’s employment had been terminated. When the detective tried to question that decision, she had to explain to her fellow directors what she had been doing on her own initiative.
Unfortunately, the Chief Executive was unable to fully disclose the reasons for the termination because of a legal commitment of confidentiality made to the outgoing staff member. Long story short, the board split over whether the Chief Executive had made the right decision and whether the detective’s actions had been appropriate. There has been a potentially irrecoverable loss of trust within the board and between several directors and the Chief Executive. As we write, we understand the matter is still unresolved.
So, what should a board do when it hears complaints about the Chief Executive, whether from internal or external sources? [1]
Proceed with caution
First, let’s recognise that there are examples of ‘whistle-blower’-type complaints that boards are very pleased to receive. For instance, is management pressuring employees to take shortcuts that endanger staff health and safety? However, in our experience, most employee complaints about executive behaviour that find their way to the board are about management ‘style’ rather than issues that the board can or should address.
The Chief Executive’s management style should only be of limited interest to the board if the Chief Executive is acting within the law and achieving the desired organisational results. However, when style issues could lead to potentially negative outcomes, such as an unusually high turnover of senior executives, the board must decide whether these are serious enough to require intervention. Many such situations are not straightforward. For example, employees leave organisations for various reasons, not all of which are, or should be, a concern for the board.
Trust but verify
There may, however, be times when directors hear about certain events or circumstances for which the Chief Executive is accountable that might legitimately cause concern, even alarm. On hearing ‘stories’ about the Chief Executive, directors must take care to ensure these are not merely gossip or self-interested positioning. In our opening case study, for example, the chair was aware of the staff performance management process underway and could have cautioned the detective that not everything was as the complainant had led her to believe.
Subsequent action is for the board to decide
Once satisfied that there could be matters of substance that warrant further investigation, these should be brought to the attention of the full board. Directors have a joint responsibility to ensure that their only direct employee is performing in an acceptable and appropriate manner.
This means the board must act in unity when addressing complaints about the Chief Executive’s behaviour. Individual directors should never assume the role of ‘detectives’, regardless of their concerns or how tempting it might be to follow a lead. Once serious issues are identified and a decision to investigate is made, the board should follow a structured, transparent, and ethical inquiry process. To support this, the board might engage an external consultant to conduct a climate survey or adopt a similar systematic approach. Principles of natural justice and fairness—especially towards the Chief Executive—must be maintained at all times. In our case study, the Chief Executive has endorsed this approach to the board, trusting it will exonerate him.
Focus on the impact of the behaviour, not the behaviour itself
Directors’ genuine concern about their Chief Executive’s behaviour should mainly focus on how that behaviour affects the organisation rather than the behaviour itself. For instance, if there is significant employee turnover, especially among senior staff, the concern should be whether this loss has caused, or could cause, the loss of intellectual capital or management expertise. This might mean the organisation struggles to deliver its products or services to the required standard. From there, the board can decide if further investigation is necessary. It certainly provides a useful basis for a discussion between the board and the Chief Executive about the risks that the board is worried about.
Be as clear as possible about what behaviour is acceptable
This kind of situation may also reveal that the board is uncertain about the management style it prefers. The management style of experienced Chief Executives is likely shaped by their previous roles and developed over time. Ideally, when recruiting, boards should clearly specify the management ‘style’ they are after and select candidates accordingly. The next step is to communicate to the Chief Executive, preferably in written form (such as a limitation policy), which behaviours are unacceptable. For example, many of our clients explicitly state that the Chief Executive must not behave or place employees in situations that are ‘inequitable’, ‘unfair’ or ‘unsafe’. This gives the board criteria to seek feedback from employees on the Chief Executive’s management style, if desired. The same approach can be applied to important external relationships.
These steps should give the board a good reference point for assessing its response to any behavioural style complaints. However, even this is not a foolproof approach, as the composition of a board and its expectations of the Chief Executive can change during a Chief Executive’s tenure. That is when a healthy relationship involving timely feedback and mutual candour, particularly between the board chair and the Chief Executive, is vital.
Note
[1] Boardworks co-founders Graeme Nahkies and Terry Kilmister published an earlier version of the advice given in this article in Good Governance, 46 (July–August 2005). Interestingly, the key principles they described have remained solid for the 20 years since!
