The dynamic between the board of directors and executive leadership is often taken for granted, but plays a key role for the success of a biotechnology company. In a biotech start-up that fuses commercial and scientific functions, it is crucial for the decision-making process in the boardroom to be well-balanced; the executive team – especially the CEO – and board members need to work together effectively. This article gives advice on why and how the CEO should build a strong relationship with its board of directors.
The CEO shares essential responsibilities and long-term goals with the board: Both work in the best interest of the business to keep it running smoothly and generate revenue. Thus, they both need to keep an eye on potential risks and work out a strategy together.
The CEO Manages, the Board Directs
Besides their common goals, CEO and board have clearly distinct functions within the company. The board hires a CEO to successfully manage operations of the biotech company and execute an agreed-upon strategy. More specifically, the CEO creates plans or reports on the business and its finances to present to the board, and oversees day-to-day business.
The board of directors, as the name implies, directs the operations by reviewing and analyzing performance of the executive leaders. Likewise, it is supposed to share its expertise and provide feedback.
Given the relevance of their work to the company, miscommunication between the two parties can hurt the business and negatively impact its performance. The CEO – often under pressure to deliver positive results – relies on the board’s support and guidance for many strategy-related decisions while the team of board members needs to be able to trust the CEO to manage the company in an effective manner.
As a CEO, what can you do to establish and maintain a balanced relationship with the board? Here are 5 recommendations.
5 Tips for Ensuring a Strong Relationship with the Board of Directors
1. Recruit independent directors for your board
It is a common procedure for early-stage companies to hire board members from a small, personal network. While this may be convenient, it is often a mistake: This constellation of board members might lack objectivity or even get too involved and try to micro-manage the CEO’s decisions.
Instead, hire directors from the outside with a wide variety of expertise as they are able give unbiased advice from their professional perspective. There are a range of ways to find and attract suitable members for your board. For example, organize open meetings to give insights into the company’s culture, or attend life science conferences such as Biotechgate Digital Partnering to connect with potential candidates from the industry.
2. Hold regular meetings and communicate openly
A constant flow of information in the boardroom enables the board to stay up-to-date on the company’s performance and to react in an agile manner: An informed board has an easier time providing guidance and intervening when appropriate.
Create opportunities to interact in-between board meetings, especially between the chair and CEO. For example, set up calls and send updates via email.
3. Build a culture of respect and trust
Promote open discussions and transparency. Make sure everyone feels confident to share work in progress or bad news without being disrespected. Giving room for unhealthy dynamics could lead to a loss of trust. The CEO could ultimately lack the support they need to deliver results.
4. Set clear expectations about responsibilities
Only if everyone knows what is expected of them at any given point in time can both parties develop mutual goals and performance standards. Each team member ideally has their own area of expertise to help balance the decision-making process in board meetings.
5. Share challenges, but also successes
Another crucial aspect of an effective CEO/Board relationship is to address challenges as soon as they arise in order to avoid or mitigate a crisis. Likewise, successes should be shared openly for everyone to feel motivated and united.