Increasingly, boards are recognizing that leadership accountability is a critical issue they need to be considering. Many of the directors I speak with realize that the organizations they serve have leadership accountability gaps. The gaps may be with the executive team or leaders at other levels of the organization. At other times, they recognize that the human resources function isn’t doing its job. Unless they address these gaps, progress will be difficult, and company performance may be at risk.
I have also found that leadership accountability is a new business issue that many boards are beginning to understand. As a result, there is high variability in whether companies are thinking about it, discussing it and ultimately doing something about it.
Boards have a critical role to play to ensure that leadership accountability is a priority for the organization, the CEO and senior executives and head of human resources.
I was chatting recently with the director of a board of a global engineering company. She had served on the Board when the company had experienced a significant financial scandal. It was a nightmare and disaster for the company – her words. It consumed the Board as it was overseeing the aftermath and engaging in damage control. She described it as a trying and stressful period, something she would never want to experience again in her life.
Boards who have had to deal with scandal, misconduct or corruption on senior executives know the costs and reputational damage that can occur. These issues fall squarely on the Board to address and resolve. Increasingly, boards are, therefore, assuming greater oversight over leadership accountability and culture.
A report produced by The National Association of Corporate Directors (NACD), states that culture is a unifying force. When it is healthy and robust, it will positively reinforce the strategy and business model. In contrast, a dysfunctional or weak culture can undermine strategy execution and thereby create significant risk for a company. Boards need to think about leadership accountability in the same way – as a risk issue requiring their oversight.
In my new book, Accountable Leaders, I share some of the areas that boards need to pay attention to:
Hire a CEO who will is an accountable leader. One of the primary responsibilities of a board is the selection of the right CEO for the company. They typically look for a proven track record, industry experience, key relationships with external stakeholders, and several other essential capabilities and traits. Boards also need to assess whether the individual is an accountable leader at a personal level.
Hold the CEO accountable for leadership accountability. The Board then needs to ensure that the CEO pays attention to leadership accountability and makes it an organizational priority. The Board and CEO need to engage in conversations about the leadership accountability of the organization. The CEO must share relevant information and metrics on the state of leadership accountability for the organization. The CEO should also engage the Board in shaping the thinking around the organization’s leadership expectations.
Recruit new directors to the Board who are committed to being accountable leaders. Boards will increasingly be looking to recruit new directors through the lens of leadership accountability. They will need to ensure that directors are personally committed to being accountable and setting the Board’s tone for the rest of the organization.
Ensure the Board has a director with deep human resources experience. Many boards struggle with fully appreciating talent, leadership and human resources issues, as they typically do not have a director with depth and expertise in these areas. Having a director, they can rely on bringing critical perspectives on how to think about these crucial issues.
Ensure the Board sets the tone for the rest of the organization. I recently interviewed the chair of the Board for a large higher education institution. I was working with them to create a company-specific leadership contract. In my interview with the chair, I asked whether the Board saw itself as part of its leadership. He paused and said it was a great question. He said he didn’t know. He speculated that some directors did see themselves as leaders and part of the organization’s leadership. Others did not. The question and our discussion prompted him to have this conversation with the other directors. Directors are increasingly expected to step up and set the tone of leadership accountability for the rest of the organization.
Here are some questions that a board can use to determine if leadership accountability is a risk within the organizations:
Is the Board confident that it is getting good information abou the organization’s current state of leadership accountability?
- Can directors describe the organization’s leadership culture?
- To what extent would directors say that the Board’s culture aligns with the organization’s leadership culture?
- Is the Board engaged to help shape the leadership expectations for the organization?
- To what extent does the Board’s leadership culture enable robust discussion and debate on critical organizational issues?
Leadership accountability will continue to be a critical business issue in the years to come. Boards have an essential role to play to ensure it is an issue that the CEO pays attention to. They also must set the tone of accountability for the rest of the organization.
Written by Dr. Vince Molinaro.