The Chairman and the CEO: The Bearing Point or Odd Couple?

Abstract

This paper is the result of over twelve months of research, primarily based on direct interviews with experienced chairmen and chairwomen. Evidence shows that when damaging crises hit companies this is frequently due to directors’ “risk blindness”, as a result of failure by boards of directors to have governed risks appropriately. Our hypothesis was that the influence of these two key roles, chairman and CEO, and especially the relationship between them, would be a significant factor in how effective boards would be in avoiding risk blindness and successfully governing strategic risk.As our work progressed, we learned much about the Chair-CEO relationship, including how that relationship needs to be built, how it can be destroyed, and the impact on boards when that occurs. We discovered that risk, especially strategic risk, the degree of trust between the Chair and CEO, and time-related issues were all closely interwoven. We also learned of the natural lifecycle in this critical relationship that in its development and ending can damage board effectiveness, and which poses a paradox for board chairs in fulfilling their critical role.