Director Challenge: Founder CEO Performance

One of the things that’s particularly difficult in being a startup board member is striking the right balance between supporting a founder CEO and listening to other people from the organization.  It is possible to err on either side — undermining a CEO’s leadership by giving too much weight to complaints; or ignoring/not knowing about complaints for too long so that actual problems become very hard to fix.  I have personally made both mistakes as a director!

The first step in trying to get this right is to have good relationships with some key team members.  That turns out to not always be easy.  Some founders/CEOs are not happy about letting board members establish strong direct communication with others in the business.  Conversely some team members feel it is inappropriate to talk directly to a board member.  So even though I try to make myself approachable, I sometimes find that people don’t make use of it and eventually they resign instead.  In some of these cases information that would have been tremendously useful much earlier is being revealed only in an exit interview.

Then there is the question of how much weight to give to complaints.  In startups, there can be strong disagreement about strategy and it is sometimes hard to distinguish between those and issues of leadership and execution.  For instance, trying out a bunch of different things can be a sign of looking for product market fit, or a sign of being easily distracted and not executing well.  Forming an opinion then depends on talking to enough people inside and outside the business (I definitely find this easier in consumer businesses where I can be an enduser of the service myself).

Based on some of my experiences, I am beginning to wonder if all startups should have a formal CEO performance review even for very young companies and even when the CEO is a founder (and may not like the idea of a formal CEO review).  Such a review could create a setting for talking to others inside the company where it is clear that their candid assessment of the CEOs performance is both desired and appropriate.  On the other hand that approach could easily feel overly bureaucratic and potentially heavy handed.

Would love to hear thoughts and alternative suggestions, especially from founder CEOs, but also other team members and investors/startup directors.

Posted: 30th March 2011Comments
Tags:  governance directors founders CEO HR

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