Give your independents a job

Many first-time CEOs underestimate the importance of their independent board members. And that causes more risk than they realize.

A friend of mine was the CEO of a PE-backed company. It was his first time in the seat. In a moment of bad luck, the business started to decline almost immediately, and he was scrambling to get it back on track. He focused most of his board attention on the two private equity partners. They wrote the checks and asked the hardest questions, so he was following a natural pull. He had two independent directors as well. Outside of board meetings, he didn't talk to them.

The independents wanted to be helpful. For the first three quarters they stayed quiet and tried to keep out of the way. Eventually they got impatient. The business wasn't performing and they wanted to help. So they created a job for themselves in the absence of direction. They asked questions about the soft spots. They pushed on the hires. They found the gaps in the metrics. They started to evaluate the CEO.

After a year, the business had flatlined but not improved. The lead PE partner was unsure about the CEO's performance and asked the two independents what they thought. Both began their tenure wanting to support him. But they had no relationship, no context, and no reason to be supportive. They had turned into evaluators. They only saw the problems.

Both said they had lost confidence. The CEO was gone by the next board meeting.

The CEO made two mistakes. He had underused two very capable people. And he did not earn support from the people who could have most vouched for him when his job was on the line.

Many first-time CEOs see independents at best as a constituency to manage and at worst as distractions to ignore. The most successful CEOs see them differently.

They treat independents as part of their team. They give each one clear responsibilities. That may be counsel on a specific topic, making introductions, or mentoring members of the leadership team. And like any member of the team, if they do not do their job, they are replaced.

Most independents want to be on the side of the CEO. So let them be.

Give them a job. If you don't, they will invent their own. It will probably be evaluating you.