Five things that can build, or break, trust between a chair and a CEO

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    Over the past decade, the separation of the CEO and chair roles has become increasingly common in U.S. companies, with nearly 60% of S&P 500 firms adopting this structure, according to the Harvard Business Review. 

    This shift, driven partly by European practices, enhances board independence and oversight. However, it introduces a new dynamic: the relationship between the board chair and CEO, which can significantly impact the board’s performance and the company’s overall effectiveness.

    Trust is crucial to a successful chair-CEO relationship. 

    Five key moments are critical in building or undermining that trust:

    1. CEO compensation: Trust begins during compensation negotiations. Clear alignment on pay philosophy and expectations helps set a productive tone for the relationship.
    2. Annual CEO evaluation: Effective performance evaluations should involve honest feedback and open dialogue.
    3. Executive sessions of the board: Independent sessions without the CEO can create discomfort. Trust is built when chairs communicate feedback clearly and promptly, ensuring the CEO understands the board’s perspective.
    4. Board composition: Trust is reinforced when boards are well composed and aligned with the company’s needs.
    5. Moments of adversity: During crises, the chair’s role is to support the CEO and manage board concerns effectively. 

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