The Director's Chair
“CEOs Can Either Fight Against Their Boards Or They Can Help Them Be Effective.”
The Director's Chair
Jeff Stiefler, a veteran board director, shares timely insights on CEO-board alignment, board effectiveness, and leadership clarity in this The Director’s Chair interview.
Reimer: You’ve been a director for many years. What has stayed consistent over time and what has changed?
Stiefler: What has been most consistent is that CEOs get the boards they deserve. By that I mean that CEOs can either fight against their boards or they can help them be effective. And helping them be effective includes recognizing that directors typically engage actively with a company once a quarter. They’ve got a lot of other things going on in their lives, both professionally and personally. They often forget much of what’s happened from meeting to meeting.
And so CEOs can get frustrated because board members don’t seem to understand the business enough or they keep asking the same questions over and over. But the best CEOs understand that they have to reset context and get everyone on the same page every time the board gets together.
It’s remarkable how few CEOs understand that. And the difference in board effectiveness and engagement is enormous between those who do it well and those who do not. If you do it well, the directors feel like partners. That hasn’t changed in the roughly 40 years that I’ve been sitting on boards.
What has changed are the areas of interest and oversight that have developed, in part because of technology and in part because of changing social norms. As just one example, the issue of information security is relatively new for most boards. Directors have to learn enough to be able to provide effective oversight on that issue. And the whipsawing on DEI is a significant change for boards that they’re just beginning to wrestle with.
Bryant: There are so many short-term issues that are fighting for attention. But the role of the board is to take the long-term view. How do you help both management and the board get the right balance between reacting and not losing long-term focus?
Stiefler: It’s part of the culture you try to develop on a board if you’re the CEO or if you’re a director—particularly if you’re a chairman or lead director. It frankly doesn’t matter what a company’s stated values are. It makes absolutely no difference what you say. It only matters what you what you do, because your actions send the most powerful and consequential messages.
So as a responsible board member, one of my jobs is to help raise the issues that need to be raised in a manner that invites participation and collaboration and discussion, but accepts conflict when that’s the right path to a fulsome discussion. Every director has the responsibility, and the CEO shares it, to instinctively make those trade-offs between the short- and long-term.
Reimer: Another balancing act for directors is being engaged, but not too engaged—you have to let management run the company day to day. How do you think about that?
Stiefler: This is one of the reasons that my strong preference is to be a chairman or a lead director. The most important relationship a director can have is with the CEO, because ultimately that’s the person you’re trying to influence. As the chairman or lead director, you develop an understanding of how the CEO views the question of board engagement, including what works for them and what doesn’t. And if they are too sensitive about the board’s level of interest, then you can coach them to modify their point of view and be more accommodating. That said, I’ve also seen many examples of directors not being involved enough.
Bryant: What other themes come up when you are coaching or giving feedback to CEOs?
Stiefler: I’ve probably participated directly or indirectly in thousands of management changes. The next one I see that happens too soon will be the first. It’s remarkable how we put off making those hard decisions, and I’ve certainly done it as an operator many times myself.
We know what we need to do, in terms of pushing someone out of their role, and we don’t do it for one of several reasons. Those conversations are painful, and finding a replacement also takes a lot of work. And we can also think that we can coach the executive back to competence. And so a common theme is coaching the CEO to make the tough decisions that they probably know they need to make.
Reimer: What were important early influences for you that shaped who you are today?
Stiefler: I grew up in a suburb of New York, in Westchester County, called Harrison. My maternal grandparents lived in the same town. They came over on the boat and couldn’t speak a word of English when they got to this country. My grandmother was 10 at the time, and she came over with her four sisters. So we would sit around the dinner table and hear their stories. It’s a positive context in which to grow up.
On the flip side, we were expected not to fail. The expectation was that whatever we did we, we did it well. Sometimes that was a positive influence, and sometimes that was a negative influence. My grandparents opened a small grocery store in Harrison, and then they opened a small liquor store across the street. I grew up watching how hard they worked. And I worked in those stores from the time I was 10. So I grew up with a work ethic and a competitive streak that mostly has served me well.
Bryant: One of the most important responsibility of boards is to hire the next CEO. What do you look for when you are assessing candidates?
Stiefler: Most important is leadership capability. And by that I mean the interest and ability to develop people and get them engaged and keep them engaged. Everything else to me is a very distant second place. If you have that, you’re going to get discretionary effort from your team. The difference in performance of an organization where more people voluntarily choose to release that discretionary effort is enormous.
Reimer: What advice do you have for someone who is about to step into their first lead director role?
Stiefler: My first piece of advice is to invest the time to meet one-on-one with all the directors and talk to them about what they like, what they don’t like, what they’d like to see changed, what they expect of you, and then report back to the board on what you’ve heard.
Second, spend a lot of time with the CEO, and go through the same exercise. Finally, I would talk to the three or four most important senior executives below the CEO about their experience with the board as well. All those conversations will help you map out your agenda. Making that effort up front starts the process off in the best possible way.