Should boards mentor their CEOs?

• Author: Lorsch, Jay W.
• Position: DUTIES OF DIRECTORS - Cover story

It is a complex question. Here are the significant considerations.

The relationship between boards and their CEOs is critical to corporate success and effective governance. Legally it is very simple. The board is responsible for managing the company, but can (and always does) delegate that responsibility to the CEO, while retaining the right to oversee and evaluate his or her performance. However, like most aspects of corporate governance, leadership matters are not as simple as prescribed, and this impacts how directors should think about the issue of mentoring the CEO. The sources of this complexity are many, and I shall mention only the most significant. But let me start with a warning: the relationship between a CEO and the board is at the heart of sound governance, so any actions that affect this relationship should be handled with sensitivity and skill.

The first source of complexity is the question of what is meant by "mentoring," including the frequency and nature of interactions between board members and the CEO. In my experience the term mentoring has many meanings, ranging from a close psychological connection to a more casual relationship. Second is the matter of the CEO himself and where he is in his tenure. Third is the question of company performance, competitively and financially. And finally, there is the nature and experience of the directors. Do they have relevant experience to be creditable to their CEO? Do they have the interpersonal skills and tact to interact with their CEO in a manner which will be seen as helpful as opposed to burdensome?

Mentoring

The dictionary defines a mentor as "a wise and trusted counsel or teacher." Psychologists and organizational experts go further, suggesting that a mentor also becomes a role model that a protege wants to become. To complicate the term, mentoring is often used loosely without any clarity to its meaning. So when I consider the question of whether directors should mentor their CEO, I can only answer in the affirmative using the first part of the definition, "a wise and trusted counsel." CEOs are not at the stage of life where they are seeking role models!

The CEO

How directors approach mentoring their CEO depends on how open to such advice he or she will be. Having spent time with over 200 new CEOs of major US companies, I have concluded that CEOs are well experienced and typically quite confident about dealing with organizational and leadership matters. Two areas in which...