Athena In Action November 8, 2019

Salon Highlights: Board-Level Crisis Management—When the CEO Is the Problem

By The Athena Alliance

Recent headlines highlighting scandals from Boeing to Volkswagen to Nissan show the critical importance of the CEO as a resource in times of crisis. Athena member Andrea Bonime-Blanc led a members-only virtual salon about the role of the CEO as a reputational risk for an organization and what boards should do to mitigate the risk.

  1. Best practices surrounding the CEO and reputation management:
    a. The board should take allegations seriously when the first red flag emerges
    b. Don’t wait to engage in an investigation, and ensure it is concerted and thorough
    c. Don’t minimize, belittle, or otherwise dismiss accusations or allegations against the CEO
    d. Engage in a worst-case scenario exercise and be prepared for the worst
    e. Include crisis management training and scenario planning at board level
    f. Have competent inside and outside counselors as needed for legal, ethical, compliance, PR, and investor relations/stakeholder management
  2. Does it feel like your CEO is trying to tie the boards’ hands when it comes to crisis management? This is another red flag. The CEO of Nissan was recently found to be defrauding the company. The board shouldn’t be discouraged by the CEO from monitoring performance management, digging deeper into auditors, and analyzing the CEO’s expense reports. “There is a tendency when the CEO and chairman are super powerful to let the CEO be the person s/he is and let what happens happen,” Andrea said. “In this case, it’s a crisis.”
  3. CEO oversight is the responsibility of the entire board. This toes the line between board oversight and hands-on management. How do you accomplish this without overstepping the boundaries of board service? Make CEO oversight a routine part of the board and committees’ basic functions, from the compensation committee where they oversee performance management and incentives to the audit committee that oversees pay packages and financial results. “The board is the only thing between the CEO and wrongdoing of this kind,” Andrea advised. “Make it a routine practice of your board rather than a pointed finger.”
  4. What does good CEO leadership look like? Andrea shared results from an HBR study showing good leaders have high ethical and moral standards (with 61% of respondents considering this an essential quality for a good leader); provide goals and objectives with loose guidelines and directions (59%); clearly communicate expectations (56%); and show flexibility to change their opinions (52%).

Athena members can view the full salon recording in the Member Resource Library. Athena offers our members a full calendar of curated virtual and in-person events designed to cover board best practices, executive leadership, work/life balance for executives, investing, and more. Join Athena to cultivate your leadership strength and reach a new realm of possibility in your career.