The Director’s Dilemma – September 2022 Edition

September 01, 2022
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Produced by Julie Garland-McLellan, Consultant at AltoPartners Australia and non-executive director and board consultant based in Sydney, Australia.

Contribution by Santiago Solis Arias, General Manager of Executive Connection S.A.S / AltoPartners Colombia, and a member of the AltoPartners Global Operating Committee. He is based in Bogota, Colombia.

This edition of the newsletter was first published on The Director’s Dilemma website and the full newsletter is available for viewing here. To subscribe to future editions of the newsletter, click here

The Director’s Dilemma - September 2022

This month we look at the difficulty of deciding whether to step up into a more onerous role or whether to remain on the sidelines as an organisation goes through a period of difficult changes.

Vaughn is a director on the board of an aged care charity. He is passionate about the role and, although he has a very demanding job, makes sure that he sets aside enough time to fulfill his duties and add value.

Recently there was some tension with the staff; three senior staff members came separately to the board with complaints about the CEO. These were carefully investigated with the help of a local law firm. Before the investigation was complete, the regulator conducted an audit and found several non-compliances and many opportunities for improvement.

The CEO immediately resigned and took all his accumulated leave, asking for the remainder of the notice period to be paid out rather than served.

The chair agreed to this and then she resigned. The organisation is now faced with searching for a new CEO and chair whilst working closely with the regulator to implement the audit findings and restore confidence in the organisation.

Vaughn’s board colleagues have asked him to step up to the chair role. Vaughn is concerned that he doesn’t have the time available to do the role justice, especially when the staff will be looking to the chair to provide leadership while there is no CEO. He simply can’t see where he would be able to find the extra hours without causing tension at home or neglecting his job. None of the other directors are able or willing to take on the role. They are all looking to Vaughn to save the company.

What should he do?

Santiago’s Answer

My first recommendation is to separate the Chair and CEO roles. Strict independence is needed for a healthy and sustainable corporate governance practice in the board structure. The Chair holds an advisor role and the CEO an executor role. The board members advise strategy for the successful performance and leadership of the organization.

For Vaughn to accept this challenge he would need to delegate the execution of the company’s strategy, especially due to the lack of time he has. I suggest mapping talent inside the organization for an interim CEO that could continue executing the day-by-day activities until the external search process is completed.

This process would include the evaluation of the management team to find out who could be the most suitable candidate to take on the CEO responsibilities and consequently giving the board an additional source of candidates to be compared with the externals.

The evaluation of the internal candidates should be part of the talent development strategy and it should be based not only on the competencies and experience required for the CEO role, but also include the assessment of personal characteristics and cultural alignment needed for the success of the role. This requirement would be for both internal and external candidates.

After the evaluation and appointment of the interim CEO, Vaughn would continue with his advisory role activities, delegating strategy to be executed. This would allow him to continue his regular activities and at the same time administer board’s traditional duties.

Julie’s Answer

Vaughn is passionate about this company. He knows that it deserves a chair who can dedicate significant time to helping it recruit an excellent CEO, handle repercussions from the recent departure of the former CEO with staff and other stakeholders, and credibly represent the organisation as it rebuilds trust with the regulator and the residents. If he is sure that he can’t dedicate that time, then he must regretfully pass on the opportunity to step into the role.

That doesn’t mean he can just decline and wait to hear in his board papers how the other directors have sorted out the mess!

He should convene a brief meeting with his co-directors and work to develop a specification of an excellent new chair; listing all the experiences, qualifications, relationships, and likely time commitment of an ideal candidate. When everyone is agreed on what the next chair should look like they can search their networks for someone similar. If they don’t find anyone, they can try advertising the role on one of the director job boards. Many will not charge a not-for-profit to advertise on their site.

They should also talk to any executive search consultants or specialist board recruiters. They may have to pay a fee to find a replacement, even though the position is voluntary, and should consider this an investment in building the right future for their company under the right leadership.