At each position during his career, a CEO generally had only one boss. Additionally, each of these bosses previously held senior management roles in the company, making them very familiar with the responsibilities of the job. Now, as new or aspiring CEOs, they are going to have as many as 10 or even 15 bosses — otherwise known as a board of directors.
Not only that, but CEOs will also report to board members who have never worked for the company, including many who have no experience working in the industry. For example, when I became CEO of Baxter International, a $12 billion health care company, one of the board members had a background in restaurant management. He knew a lot about food service, but nothing about health care.
Such challenges can create friction, even to the point of an adversarial relationship. As a McKinsey report noted in 2023, “Mismanaged, the relationship between the CEO and the board can devolve into a loss of trust and crippling inefficiency.” The prospect is even more daunting when we consider research that shows as much 25 percent of corporate boards are dysfunctional.
Consider what happened to OpenAI, when Sam Altman, Founder and CEO, he was fired by the council, which accused him of ineffective communication and misinformation. About a week later, Altman was was restoredamid protests within the company over his removal, and the board of directors shaken later. The question remains: How much of this unproductive drama could have been avoided if both the CEO and the board had focused more on their working relationship?
A positive relationship starts with setting expectations
Given my experience as both a CEO and member of more than 20 boards, including Leidos and OptionCare Health, new and aspiring CEOs often ask me for advice on how to create a positive and productive relationship with their board. . My advice can be boiled down to a four-step model steeped in its principles values-based leadership and oriented toward building relationships and reducing frustration and conflict.
The first step in the model is to set clear expectations for both sides. From the board’s perspective, expectations should be clear about how often they want to meet with the CEO, the level of detail that will be discussed, and their desire to hear not only about what’s going well, but also about the major issues and challenges facing the company.
For the CEO, it is reasonable to expect every board member to be on time for every meeting and ready to challenge management respectfully. Arguably, the greatest expectation is that board members will know the difference between management and governance. I often think about the advice I received William Grahamthe longtime chairman and CEO of Baxter International: “Management manages and boards rule.”
When these expectations are well understood by both parties, everything runs smoothly. It is much easier to prioritize the values of the company and its leaders and encourage a healthy dialogue for a balanced perspective.
However, I have seen many cases where either the board is too involved in management or a weak management team relies on the board to manage. The result is confusion about whether the CEO or the board is actually running the company. Often, chaos and unnecessary drama ensue.
One of the most disturbing examples was Disneywith yet another change in board leadership and yet another CEO search underway. Additionally, the company has been engaged in a costly proxy battle after activist investor Nelson Peltz and former Marvel CEO Ike Perlmutter tried to win board seats. Now, Disney’s board will soon take on its fourth chairmanship in three years, with James Gorman, CEO of Morgan Stanley, taking that position. It’s on Gorman’s agenda finding a successor for CEO Bob Iger, who is expected to step down for a second time in 2026. Going forward, building good working relationships between board members and with the new CEO must clearly be a priority.
Communication, expectations and consequences
Once expectations are set, the second step is to communicate clearly and often. I have seen many situations where management did not keep the board informed about an important issue and the board was caught off guard. Neither boards nor management want to feel blindsided.
When expectations are clearly set and communicated, steps three and four follow: holding each other accountable and understanding the consequences for meeting or failing to meet expectations. If expectations are not met, CEOs should not be surprised if they are no longer running the company. Likewise, board members who do not foster a healthy challenging environment or who consistently exceed their governance responsibilities should be removed from the board. And, when expectations are met by all parties, the reward is a higher-performing company and a rising share price.
As new CEOs take the reins of a company, they cannot overlook the importance of establishing a positive working relationship with the board. A good relationship helps ensure a successful and smooth transition for the incoming CEO and better management across the organization.
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A version of this article originally appeared on Forbes.
