Governance Bites #81: CEO working with the chair, with Rhiannon McKinnon

In this episode, Mark Banicevich asks Rhiannon McKinnon about the CEO working with the board chair. He asks about this special relationship, and how this differs from executives reporting to the CEO. They discuss the remoteness of the relationship, and the types of decisions and information that are delegated entirely, or reported. Rhiannon talks about the importance of trust in the relationship, and how to establish boundaries. She also shares advice she would give to a new CEO about working with a chair.
Rhiannon McKinnon helps new and aspiring CEOs step up and thrive. She has founder and instructor of CEO 101 (https://www.ceo101.nz) which provides online courses and coaching for senior leaders which complements her consultancy business, Cassiobury (https://www.cassiobury.co.nz/), which provides strategic advice and counsel. Prior to this, she was CEO of Kiwi Wealth, the KiwiSaver provider and fund manager associated with Kiwibank. Rhiannon held this role at the end of a decade with Kiwi Wealth, Gareth Morgan Investments, Kiwibank and New Zealand Post. Rhiannon has a background in corporate finance, and mergers and acquisitions. 
A big thank you to Alexander PR (https://alexanderpr.co.nz/) for hosting us in their lovely office!
#governance , #leadership , #corporategovernance , #boardcraft , #decisionmaking , #makingadifference , #ceo, #governancebites , #boardroom

Transcript

0:00

Hi, my name is Rhiannon McKinnon. I'm the founder and CEO of Cassiobury and also CEO 101, which is designed to help aspiring and new CEOs [Chief Executive Officers] step up through both courses and coaching. So today, Rhiannon, we will talk about the CEO working with the chair. Brilliant. Okay, thank you. Hi, I'm Mark Banicevich. Welcome to Governance Bites. As you just heard, today I get to spend more time with Rhiannon McKinnon, which is very exciting for me. So thank you very much, Rhiannon, for your time. I very much appreciate it. It's really a pleasure. And I also actually should do a bit of a shout-out and say thank you to Alexander PR for hosting us. It's been really lovely for them to have us in their offices. So thank you very much, team. The topic today is around working with the chair, as the CEO, and that is kind of your specialty, right. About coaching CEOs and so forth. So I really look forward to your thoughts on this. While the CEO does report to the entire board of directors, they have a special relationship with the with the chair. Yeah. Can you talk a little bit about that relationship? Yeah, absolutely. You know, I think while, you know, you do report to all of the board, as you said, I think it's very difficult to have multiple bosses. You know, to try and please seven people, I think is very hard. So, you know, what we did at Kiwi Wealth when I was promoted, is the chair was super clear that he was going to be the point of contact and essentially the kind of the boss in a more traditional context. It was up to him to really manage how he then spoke to the rest of the board so that we weren't having a whole load of private conversations without involving the board. But on a very frequent basis. I mean, we were weekly, we would meet and have a one-on-one conversation about how the business was going, and it was very clear that that was my line of report and that's who I should speak to if I had any problems. How long were those weekly one-on-ones? Well, they were actually an hour long to begin with. You know, meeting frequency is quite an interesting one. I've spoken to all sorts of CEOs since then around what sort of meeting frequency should look like. Some people literally have it daily, and people kind of calling up and saying,"Can you meet at the pub?" And, you know,"Can I speak to you about that?" And I think that is too frequent and too intimate. I think you need to have boundaries around that to make sure it's quite clear when they can speak to you, and give you an opportunity to actually do your job. Yes. But when I when I sort of stepped up, I think weekly is probably as frequent as seems sensible. I was pretty green. I was pretty new. I was acting. There was a lot on. I was happy to speak to the chair each week to make sure I was on track. Yes. But I feel like when I speak to more established CEOs that that frequency has tends to be a lot less, and actually, it dropped off me as we got more established, as we kind of knew that we knew what we were about, that frequency dropped away a little bit. Down to once a month, once a fortnight? Probably more once a fortnight or so. You know, we just, if we missed meetings, it wasn't a big deal anymore. Right, right. Okay. How does the CEO's reporting relationship differ from an executive's reporting relationship? Well, I think the CEO up to the chair, I mean, they are a lot more remote. You know, normally with an exec position, you've got someone who's working in the business daily, whereas the chair is not working daily in the business. They've probably got a portfolio of their own governance roles that they're doing. Yes. So you have to kind of remember that they're not living and breathing it like you are all the time, and that therefore you've got to be really careful and thoughtful about the information flow. That you can't assume that they know things, and you've got to be really thoughtful about what you give them in terms of information so they're getting a really accurate, you know, idea about what's going on in the company, and not just to feather your own nest as you go. They need you to make decisions for them. Not for them, but I know that my chair was very clear that, you know, "You are a decision-maker here,"and like pushing it back up to me is not something that I need." And so we'd be very clear often that, "You're the CEO, Rhiannon, and you make the decision." Right. Yeah, which was interesting. And, you know, building on that trust, like any relationship with the boss, of course, you want a trusted relationship. But I think given that remoteness, given the way that the chair actually delegates an awful lot of responsibility and authority to the CEO. You know, building on that trust becomes really super, super important. Right. Yes. Let's elaborate on that a little bit more, about that remoteness, in particular. As you say, that you're in this the role every day, and the chair is, part-time is probably a bit of a stretch in most cases. They, as you say, have got a portfolio of roles. Yeah. So how does the CEO get the most of that relationship, given that remoteness? As I said, it's really about that sort of information flow, making sure that you are giving them what they need when they need it. And when you're giving them information, you've got to be really clear about what the information is for. So, you know, when I was writing this course, I was chatting to various governors, and they're saying, you know, it's frustrating actually when the CEO just keeps sending up, you know, little bits of information all the time, like for what end, for what purpose. So you want to be really clear about those sorts of things. And so, but making sure that the bad news and the good news gets up to them. Yeah, of course. You know, it's so easy as a human to be like, "Oh, you know, we'll save that for the meeting," or so forth. But you want to be, again, for to build up trust, you have to actually be transparent, and that means showing what's going well and what's not going so well. Kind of feels like a child-parent relationship, doesn't it? Hopefully not. Hopefully, you're two grown ups. Yes, but certainly the whole thing of, you want your kids to bring their problems to you as early as possible,- Yeah. - because then you've got a greater chance of fixing them, right. Yeah. And it's the same thing as a CEO. If you've identified a problem, and you're trying to deal with it yourself, they've got so much experience in that boardroom that the earlier you take the problems to the chair and the board, - Yeah. - the more likely their experience is going to help you solve those problems. And so that kind of no surprises policy, I think, is really important. Absolutely. You just don't want them being blindsided by something. So if something's coming up, something difficult in the business, you want them to know sooner rather than later. Yes. Yeah, absolutely. Without probably bleating every time something goes a tiny bit wrong. Yeah. Actually, let's explore that a little bit more that you know, the boards are delegating the operational decision-making to the CEO. What sorts of decisions do you tend to make yourself as a CEO, and what sorts of decisions do you actually say, "No, this is one I need to take to the board"? Yeah. Well, hopefully the board's been really clear about where they've delegated authority. And on the day-to-day management and operations, you should be taking those decisions as much as possible yourself. I mean, things we used to take back up to the board would be sort of much more strategic, you know, if we were doing M&A [mergers and acquisitions] and so forth, we would take that back up to the board and make sure that we're going in the right direction. But even then, sometimes, you know, to speed up progress, they would delegate away - away sounds - or delegate down to maybe just the chair and the CEO. Like decisions within a certain framework. Yes, right. So, you know, you have got the delegated authority to sign this at this point, and at these sorts of prices, for example. Right. You know, large business cases for large investments would always come up to the board. And actually, in our case, you know, even rem [remuneration] decisions for my own staff. For your exec [executive] team. Yeah, exactly. I couldn't give them pay rises just as I wanted. Yeah, that's not uncommon, I think. No, not at all. Signed off by the board. No, I think that's quite wise. Yes, absolutely. Those boundaries you're talking about when you first stepped into the CEO role, then how do you and the chair kind of get down and establish what those boundaries are? What's yours and what's not? Well, it should be quite clear from the normal kind of governance versus management, what those boundaries are. Yes. You know, how to make sure, particularly if, hopefully you don't, if you're a green CEO like I was, hopefully you don't have a green chair who, you know, doesn't, isn't as good at sort of staying within that governance sort of framework and isn't stepping over into management. So hopefully those sorts of areas are quite clear. You normally probably find that board members are more likely to kind of have a passion area that they are really interested in, and that you have to sort of try and manage that. And then there are some areas where it is a little bit sort of, maybe when it comes to stakeholder management or media relations, it could be the chair or the CEO. So I think it's always really great to be clear upfront who's doing what. Absolutely. And then it makes it much easier, particularly for the CEO, to kind of say,"Oh, you know, you maybe you overstep the mark here," but you really need to have defined where that mark is first. Absolutely. Right. So the delegations policy will be part of that. Absolutely. And the discussion around that policy will help you get those boundaries in place. Yes. Yeah. And as I said beforehand, you know, I often get told, "You know, make the decisions," and yeah. So I always kind of take things back up, saying, "Oh, I'm not sure about what to do here," and, you know, maybe it was just in my particular case, but I'd sometimes be told, "Just, you know,"making that decision is your job." Yeah. And then deciding whether that was a good one or not, maybe was the governor's job. Yeah, right! It's on you, though. Even in any new CEO gig, that would be something you'd explore over the first few months, right. Yeah. And I'd want to be in a position where I'd be a little bit conservative to start with, and say, "Look, you know, is this one that you want"to be involved in, or do you want me to make this one?" Okay. Well, in future, those sorts of decisions, I'll be comfortable making them. But I think I'd rather ask for permission than forgiveness. You know, we often talk the other way around jokingly, but I think quite often you do. Yeah, I think you're right. I think. And then maybe that was it. I was permission-seeking to begin with, and it was only probably in the first six months - Yeah. - that I kind of got that feedback to kind of get on and make those decisions. And I think you're so used to kind of asking somebody else if that's a good idea. And it's like, "Oh, actually, the buck does stop with me." Right, right. And as you say, over that first sort of six months, you'll get the feel for what is and what isn't, and establish that. And again that comes back down to individuals in terms of, you know, what those individual chairs or board members really care about. You know, I think, you know, I'm sure if I took another CEO role, it would be different about where those decision points lie. Yeah. Yes, of course. You emphasise trust. Yes. You know, in your training in particular, the importance of trust between the chair and the CEO. Can you just elaborate on that a little bit? I just think the chair has sort of has given you so much authority. If you think about where the legal liability still lies with the board, and with the chair, and yet they have to sort of delegate away that daily management that the trust that you're doing it well for them, I think needs to be really, really strong. I remember, you know, I said I started with these weekly meetings, and I remember after about six months, there was just this real obvious shift where I hadn't stuffed things up. Things were going relatively well, and I could feel this huge exhale from my from my chair, where suddenly, you know, it hasn't been a huge mistake to appoint this woman into the role. And it just changed the shift in the meetings from that point onwards was just palpable. Yeah. And I remember about a month later, I kind of let out a sigh, or my breath, as well, because I think we were both holding our breath for the first few months, - Right. - just trying to work out how it was going to go. But then, you know, there was no problems after that. He knew I was going to call him when I needed him, when it was important. And, you know, that I wasn't hiding anything, that we had that sort of open relationship. Yeah, yeah. As you say, the key driver behind that would be the liability of the directors, right. And as you say, they're only in the business a small amount of time of the week, - Yeah. - and they don't see everything that goes on. So they absolutely have to have trust in the CEO. Yeah. So yeah, that's a really strong point. Another one that you've mentioned a little bit earlier, and I'd like to talk about a little bit more, is this flow of information. Yes. It's really important to have good information flow, but you don't necessarily want to be emailing everything to the chair. No, you don't. You don't want to flood their inbox. So what factors can you as a CEO use to determine, what do you pass on? Yeah. And what do you not, think, they don't need to know that? Yeah, that's interesting. You know, I think how you, so there's sort of two bits of information flow. It's one what do you pass on in between meetings, and almost what do you put into your board papers? Yes. So I think between meetings, it's almost like a no surprises policy. Obviously, we kind of, we're speaking quite frequently anyway, but as that frequency drops, it's sort of things that are out of the ordinary, things that you know might, maybe it will hit the press or whatever, or maybe it will make a big difference to revenue or profit. But those large things are the ones that you want to probably flag up rather than sending up all the little decisions that you might be making. And I think when you do them, you need to sort of do the kind of "so whats?" to it as well. Right. You know, again, chairs and directors aren't in the business all the time. So just to send them some information without context, I think means that they have to do the thinking and the legwork around, you know, why has this information even sort of landed into my inbox? So, you know, to give them the information and say, "Actually, this is just for your information," or more importantly,"This is the consequence," or "This is where we need a decision," or, you know, "Watch out for"this coming up next." Yes. When it comes to board papers and so forth, you know, I think being really clear about, you know, what those, what you need out of them, what they need to be thinking, what those recommendations are, is really important. But as I said, you know, yes, you should be sort of reporting on strategy, and you might have, you know, RAG [red, amber, green] statuses or whatever it might be. But making sure the good and the bad goes up is really, really important because they're really relying on you to filter things. Yes. And kind of back again as well, you need to make sure that the, what the board is talking about, you know, gets filtered back into the organisation, as well. So if I could try to oversimplify that, before you push the send button to the board, - Yeah. - ask yourself, "If I was sitting in that board seat,"my question would be, 'So what?' Have I answered that question?" Yeah, I like that. And if the answer to "So what?" is, "Well, you probably don't really need to know," then don't push the send button at all. Yes, I think so. And I think, you know, I think all of us like to kind of, you know, puff up and fluff up all the amazing things that we do, and often that's not necessarily what needs to go up to the board level, as well. And I found that with board papers that, you know, C-suite [CEO and executive], we were like, I've have done this and I've done that and blah blah blah, and a whole lot of doing-type information can come into board papers. But, you know, a lot of that can be sort of taken out because it doesn't really help with that sort of long-term strategic management. Right, right. Which again may be a bit of a difference between a management or executive role and a CEO role. Because, you know, when you're coming up to your performance reviews, it's very much about,"What have I done? What have I achieved?" Yes, absolutely. But it's not about just the busyness. Yes, right. Don't just don't translate up business. Another way I like to think about it is the CEO being in the middle of an hourglass, you know, and that's, you know, - Yes. - really deciding what goes up and what goes down again, is, I think, really important. So that's a really influential important role of the CEO. That's a great analogy. Yeah. That's a really great analogy. It fits visually as well with the organisation chart. Yeah. That's really nicely done. Final question for you. Yes. What advice would you give to a new CEO about working with a chair? It's similar to what we're just chatting about with about the board members, but really invest the time and really invest in being transparent and open so that you're really building a really strong two-way relationship. I think strong relationships between the CEO and the chair are, you know, you can feel them through the whole organisation when they're working well. So taking the time, understanding what they need, being humble and learning about the organisation and what they need from that example. But yeah, good luck, really. Okay, well, Rhiannon, thank you very much again for your time. It's been lovely to meet you and have this time with you. I really appreciate it. I'll look forward to hopefully doing it again. Okay, thank you so much. Thanks so much for having me. I really appreciate it. Not at all. And I look forward to seeing you next episode. Thank you for watching this episode of Governance Bites. We have more episodes on YouTube and your favorite podcast channel, where I interview directors and experts on various topics relating to Boards of Directors and governance. We'd love to see you back, and please like, subscribe, and share the videos and podcasts.