Boards often misjudge CEOs through halo effects that distort performance perception. Peter Browning recommends informal settings like breakfasts and dedicated strategic days to let board members observe the CEO one-on-one, ask candid questions, and see behavior beyond formal presentations.
Since the board can't run the company, and some have tried but it's always failed, they really have 3 responsibilities. Do you have the right CEO? And that's not as easy to answer as you might think. Yes, you might be feeling very good about the performance of the company, and keeping in mind you're never quite as good as your numbers. They're never quite as bad. There's a halo effect when things are going well. There's a halo effect when things are not going well. And so it's incumbent on a board over a period of time to develop practices that allows it to get as much insight into the CEO and his team as possible. So that clearly is whenever there are— when the board does meet, that you take advantage of those social occasions where you're meeting with other members of the management team. And of course, they're always on their best behavior, but trying to interact with them, it's these There's annual where you have— most boards have 1 or 2 days extra days of meetings where you talk strategy. It's more informal. There's more socializing. It's the opportunity to meet with the CEO alone without other members of management. That needs to be done whether it's— people do it, some do it for breakfast, some do it for lunch, some do it over dinner. It really doesn't make any difference. It's board in a more relaxed setting getting to ask any and all questions that it has on its mind to the CEO, and it gives the CEO a chance to interact with, with the board in a more relaxed, unstructured way.
