Trust is the critical element.

• Author: Robinson, Lowell W.
• Position: DUTIES OF DIRECTORS - Cover story

While the board's role is oversight, there is often a role for board members to play in coaching and mentoring CEOs and individual members of the leadership team. You may have new members to the C-suite or people who have never been in C-suite roles in public companies. They may have been promoted internally or came from other companies that may never have had a board of directors nor been in a situation where they are dealing with institutional investors and shareholders.

This is especially the case with the need to be Reg FD compliant. I have been in several board situations and CFO roles where investor relations and legal training was required in terms of what could and could not be said to various investors. Oftentimes it is too easy to answer the question. And it is natural to want to please. But declining to answer a question in a polite way is often required since the answer may require disclosure of non-public information.

I remember when I was CFO for The Travelers's $5 billion health care businesses I had to meet with equity analysts. The head of investor relations coached me in terms of how to work with them. Subsequently, when I became CFO for Advo/Valassis, a $2 billion Fortune 600 NYSE marketing services company that was 25% owned by Warburg Pincus, I worked with Beth Dater from their investment management subsidiary (she appeared on "Wall Street Week"). She was extremely helpful in coaching me on press releases, conference calls and dealing with The Street.

In private PE or lender-controlled companies, you also have various constituencies that C-suite leaders may have never dealt with before. And many of the same disclosure principles apply here too. It is important to treat lenders equally and keep them all informed on a regular basis.

As a board chairman, it is incumbent to be a sounding board and provide input to the CEO. This often can be delicate since the chairman has an oversight role, not a management role. It is critical to set up the proper communications framework for the chairman to be this sounding board, effectively putting his arms around the CEO in providing counsel. This can take time since trust is a key factor, particularly where no relationship existed before. But having the right partnership can pay off handsomely in making the CEO and company more effective. In many cases, the chairman has diverse experiences and can significantly enhance the CEO's effectiveness both internally and externally.

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