Understanding Roles: Board of Directors vs. CEOs

The lines are often blurred between an organization’s Board of Directors and key officers, like the CEO. For some organizations, key officers are board members; for others, key officers are not allowed to sit on the board due to conflict of interest. Board of Directors vs. CEOs — how do these roles differ? What is the relationship between CEOs and board members?

Responsibilities

The responsibilities of CEOs and board members vary from organization to organization. Generally, the board has the power to hire/fire the CEO, approve major policies, and make impartial decisions on behalf of the organization and its stakeholders. The board often oversees and approves departmental budgets and executive compensation. Because the board only meets a few times a year, its focus is the long-term health and goals of the organization. Meanwhile, CEOs make decisions regarding day-to-day operations and keep the board informed when its members are not meeting. CEOs focus on organizational structure, delegating assignments and agendas, and increasing profit.

Collaboration

CEOs and board members co-exist for a reason. Though their responsibilities may differ, they share two common goals: 1) uphold the organization’s mission and values and 2) act only in the best interest of the organization and its stakeholders. Therefore, collaboration is key! The CEO can look to their board for feedback and direction, while the board can provide guidance on internal and external conflicts. The two roles were designed to support one another. If the relationship between a CEO and their board is not well-defined, it can cause problems. When there is effective communication and collaboration, CEOs and boards can work in the best interest of the organization — together.

Boundaries

CEOs and board members all make high level decisions. Therefore, it may feel at times that one executive is stepping on the toes of another. This is especially true when the CEO has too much influence over decision-making. After all, the board was designed to “check” key officers. To support effective collaboration and avoid conflict, there must be firm boundaries in place. All executives and board members should have defined roles to ensure there is no power imbalance. By following strict protocol, there is no room for confusion or miscommunication.

At Floro Business Strategies, we offer knowledge in business alignment, strategic planning, succession planning, executive planning, and distribution channel development. We believe we would be an asset to your Board of Directors! Interested in learning more? Contact us today!  

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