Part four of Simon Freakley's Leadership on a tightrope series
Tesla and Elon Musk were once again in the news recently—this time around board governance and concerns around transparency and independence. While I am not privy to any non-public details, I am confident that no CEO wants to generate headlines around corporate governance. There is only downside.
Many CEOs see the board and its various processes as performative or, frankly, a waste of their time. The meetings can drag on. Information sharing might be more effective via other means. Some directors may not have the right levels of engagement and may value their board seats for the status they confer.
But getting governance right is essential for the health and sustainability of any organization. The best-functioning boards improve transparency, decision-making, and risk management, while attracting capital investment.
The job of CEO is a lonely one. They report to no one within their organization except a board that is not fully engaged in the day to day business. At the same time, CEOs must interpret their organization to the rest of the world and reflect the world back into their organization.
That is one of the reasons why our annual AlixPartners Disruption Index shows that CEOs feel the highest levels of anxiety for themselves and for their organizations. Like a skyscraper in high winds, which sways more the higher up you go, disruption is felt most keenly at the top. No wonder CEO tenure is falling.
For me, one of the biggest benefits of the board is having a group of peers whom I can rely on for advice and judgment. During the pandemic, one of our board members, Dr. John Noseworthy, the former president and CEO of the Mayo Clinic, helped us better understand the public health crisis and formulate our response plans. In a similar way, Dennis Archer, the former Michigan State Supreme Court Justice and former mayor of Detroit, who also serves on the AlixPartners board, provided invaluable coaching on how to support our people following the murder of George Floyd.
Corporate governance may be viewed as the neglected stepchild of ESG, but it is actually the foundation. It is essential to get right. Failing to do so introduces significant reputational and other risks. And when the right investments are made, the returns are meaningful.
Read more of Simon's Leadership on a tightrope series:
- Part One: Leadership on a tightrope
- Part Two: Stop chasing the shiny, new thing
- Part Three: Do not let the loudest critics set the agenda
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