Board effectiveness: Are you running the board or is Management running it for you?

Board effectiveness: Are you running the board or is Management running it for you?

We’ve all heard tales of Deutsche Bank’s uncomfortable demise.

From a well-respected institution, the German powerhouse allowed a series of hasty cowboys to wrestle control of the bank, loot it for their own purposes, and unravel 146 years of conservative banking tradition.

Between 1994 and 2012, the Deutsche Bank Board was firmly dismantled, and the steady stream of high-flying CEOs ensured board members were powerless in the face of enormous regulatory backlash, and were hopelessly unable to stem the haemorrhaging of cash.

Deutsche Bank shares are now floundering, and have been for the last decade.

This chilling tale is a reminder to check on Board effectiveness, or in other words – are you running the Board or is Management running it for you?

Complete the BOARD EFFECTIVENESS ‘command and control’ checklist

If you answer yes to any of the following…

  • The CEO sets the agenda for the Board meeting with approval from the Chair
  • Management recommendations are mostly approved without discussion
  • The company secretary reports to the CEO and has multiple roles internally
  • Governance documents always have input from the CEO
  • The CEO is interviewing Non-Executive Directors for appointment
  • The CEO systematically phones each Non-Executive Director each month to share information
  • Management presentations take up more than 50% of Board meetings

…you may have a problem with a “God Like” CEO.

Of course, most CEOs are well meaning. They have the organisations best interests at heart and truly value the insight from the Board. But there are a few that don’t.

This can mean:

  1. Critical decisions are made without the Board’s support;
  2. A toxic corporate culture develops;
  3. Unexplained issues company performance or cash flow.

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The antidote to a CEO control problem

To stop a Deutsche Bank scenario, and make sure your board has visibility and is running effectively, the Chair needs to:

  1. Ensure there is clarity between the responsibilities of the Board and the CEO.
  2. Assess the performance and developing the capability of the Board
  3. Take control of the Board Meeting agenda
  4. Ensure competence and clarity of committees – especially audit and risk
  5. Regularly touch base with the management team
  6. Conduct regular CEO evaluations and ask for feedback from all Directors – many Directors sense a problem with the CEO early on, so it pays to listen!
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While Deutsche Bank is still struggling to find its clear oversight, it’s likely there is still time for the Chair to define the distinction between the Board and Management and create true Board effectiveness.

About Sterling Black

.Sterling Black is a specialist Board and CEO leadership firm. With over 25 years’ experience we give clear recommendations on whether your current leaders are, or can be the leaders you need.

We help Boards build the capability to deliver on their vision and plan for expected or unexpected CEO events. We understand how to get CEOs to engage with a development process, how experienced executives best receive feedback and how adults learn.

Contact us today for a confidential discussion.

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