There is an increasing trend among nonprofits in India to hire professional CEOs to run the organisation. Often this is because the founder is no longer able to, in some instances does not want to, and in rare cases truly believes that it’s time to move on from being at the helm of things.
It may not be an exaggeration to say that often boards exist for the founder first, and then for the organisation.Typically, along with the organisation, its staff, and programmes, the incoming leader also inherits its board. A board that was constituted by the founder to suit their needs at the time.
And while the newly appointed CEO usually enjoys the freedom to run the organisation in the manner that they think is best, it’s rare for them to enjoy the same liberty to make changes at the board level, certainly not for the first few years. What are some of the common challenges that such a situation brings with itself?
It’s important to keep certain factors in mind about boards that are formed by founders:
- They are people who would usually be either friends with or family of the founder, or at the very least, recommended by friends.
- The board is a group that learns to work with, and adjust to the founder’s needs through the growing phase of the organisation—its role ranging from simple compliance, to supporting the founder in the manner that is sought (even if it includes doing absolutely nothing at times).
- The relationship is with the founder first—the individual—rather than with the cause, although this could evolve over a period of time.
- The dynamics within the board are orchestrated by the founder, and sometimes by a chair that the founder may appoint. There is a certain chemistry between the founder and the members of the board, which leads to patterns of interactions that determine engagement.
- When the board is actively involved, it’s usually at the behest of the founder, and rarely will a board proactively decide to change the way that it functions.
- When there is a change in the composition, again it’s because the founder may have identified a new or different need, and they will usually have the last word in determining the change.
It may not be an exaggeration to say that often boards are boards for the founder first, and then for the organisation.
What happens when a new CEO takes over?
When a new CEO takes over, they inherit, along with everything else, a board that is used to functioning and responding in a particular manner to the founder/predecessor. The presence of the new CEO impacts everything within the board—chemistry with the CEO, their relationships with each other, and which asks are prioritised over others.
A lot of these changes begin to create tension—expectations of one another change, inadequacies become starker, assumptions are made about intent and actions, and so much more. This often does not get addressed directly until tensions run high, expectations remain unfulfilled or unarticulated, and the new CEO ends up ‘putting up’ with a board that they had no say in forming, or ensuring would work for them as an individual.
What can a CEO do in their first few months to mitigate these challenges
1. Understand the board better
- Take out the time to chat with the founder/predecessor, and try and understand why each member was chosen to be on the board; their relationships with each other; what kind of people they are; what their strengths, constraints, and challenges are; how they engage with the organisation; what to expect from them going forward and why.
- Meet with every board member one-on-one and try and understand their motivations, expectations of the organisation, alignment with the way forward, ownership of the vision, and strategy.
- Think about how personal relationships with the founder/predecessor could impact board chemistry and functioning.
- Draw up individual engagement plans (including how they will engage with the CEO as well) for each board member based on the conversations had with them, and discuss the execution of this plan with them. Present the same to the whole board so that there is clarity on what each person has agreed to.
- Dedicate one board meeting out of every three to four where the board reviews its ‘new relationship’ with the CEO—are things going well? Are expectations clear? Are actions being taken in the intended manner? Are there new challenges emerging? Planning for this meeting conscientiously indicates a commitment that the CEO would like for board engagement to be optimal.
2.Understand the board’s work culture
- This refers to everything from how the agenda is planned, shared, and discussed, to how the meeting is prepped for, and conducted. It also includes factors like how absenteeism for meetings is dealt with, and so on.
- Review past agendas and board minutes, and spend time understanding how decisions were arrived at (it is useful to understand this from the point of view of both the predecessor as well as one of the board members).
- If the new CEO wishes to change any of this, it’s best done in a consultative manner with the founder and the board, along with strong reasoning of why change is necessary. This leads to greater congeniality.
- In India, especially, socio-cultural factors play a significant role in determining intra-board dynamics. Gender, age, perceived influence of competencies, and sectoral background impact interactions between board members. Dissent and agreement within the board is often influenced by some of these variables. Being conscious of this, and spending time to understand it will hugely help a new CEO anticipate outcomes from discussions and plan better for the same.
3. Give it time, and be honest
- It will take time to get the groove going. Just as in any new relationship, things settle in slowly. In a new CEO—board relationship too, equations have to evolve. The more organic and natural they are, the stronger they will be.
- However, it’s important to note that some relationships are just not meant to be. Sometimes people won’t get along. It’s not uncommon to find that some board members are just not able to relate to the new CEO. In such situations, it’s best to decide where the buck stops, and take appropriate actions quickly so the work of the organisation can continue.
- For a new CEO, it’s very important to be perceived as ‘successful’ quickly. This often puts pressure on the individual to force themselves to ‘make things work’, but sometimes this is unrealistic. Anticipate and plan for some failure with board engagement, and have an honest conversation either with the founder or a trusted board member about the challenges.
- Give the board time to understand that the new CEO is not the old one, that they are likely to have their own plans for the organisation and their own ways of doing things. Taking it one step at a time, and checking oneself for ‘unfair comparisons’ builds a stronger culture and is conducive for good governance.
- And finally, it is important to note that the CEO does have some freedom to build a board that will work for them over a period of time (defined against what is best for the achievement of the organisation’s goals). This provides enormous courage and conviction for the CEO who is now more likely to take the extra step needed to create a robust board that contributes efficiently and prudently.
In conclusion, an inherited board can be the support that a new CEO needs to take the organisation forward. However, this is best done when challenges are anticipated, analysed, and possible solutions planned for, in order to mitigate the negative consequences.