Tip #24 Should Your CEO Be A Member Of Your Board?

Posted on: September 1, 2017
Tags: Tips for effective boards

The practice of CEOs serving as members of their boards is somewhat common among nonprofits and even more common among for-profit companies.  In a survey of over 800 non-profit organizations conducted by BoardSource (2015), 50% of responding organizations indicated that their CEOs serve as members of their board.  According to the same survey, of CEOs serving on their boards, 76% are non-voting members and 24% are voting members.  (BoardSource, Leading with Intent:  A National Index of Non-profit Board Practices, 2015, p. 44) In the for-profit sector, CEOs serving on their boards seems to be the norm.  While it has been quite common for such CEOs to also serve as board chair, there seems to be a trend among major America companies towards establishing a leader for the board separate from the CEO.  (Ram Charan and others, Boards That Lead:  When to Take Charge, When to Partner, and When to Stay out of the Way, Harvard Business Review Press, 2014, pp. 82ff)

BoardSource recommends that CEOs of non-profit organizations serve as non-voting board members.  They argue that having the CEO as a board member is valuable for supporting an effective board-CEO partnership.  However, they advise that the board membership be a non-voting membership in recognition of the board's supervisory role with respect to the CEO and the CEO's accountability to the board.

According to the Policy Governance® system of board operations, having the CEO serve as a board member can confuse and undermine the board-CEO relationship.  The board is clearly the boss of the CEO.  To have the CEO serving as part of the body that is his or her boss can confuse the board-CEO relationship and compromise accountability.  This problem is compounded if the CEO is also the board chair.  Of course, the Policy Governance® system recognizes the critical importance of effective communication between board and CEO and of the CEO's attendance at and participation in boardroom discussions.  But the CEO does not have to be a board member or board chair for there to be effective board-CEO communication and CEO engagement in boardroom discussions.  Having the CEO thoroughly involved in boardroom discussions achieves the value of this engagement without the need for the CEO to be a board member with any role confusion and undermining of accountability that may accompany CEO membership on the board.

At a time of front page scandals related to governance, it is important that governance structures support board oversight of the CEO and CEO accountability to the board (as well as board accountability to key stakeholders/ organizational owners).  The Policy Governance® recommended practice that CEOs not be chairs (or even members) of their boards makes eminent sense to me if we want to encourage responsible accountable governance.

What do you think?

For more information about the Policy Governance® system, please go to www.BoardsOnCourse.com/policy-governance.  

Policy Governance® is the registered service mark of Dr. John Carver. Registration is only to ensure accurate description of the model rather than for financial gain. The model is available free to all with no royalties or license fees for its use. The authoritative website for Policy Governance is www.carvergovernance.com.