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Trust Me, or Else

Many a non-family CEO sees a board of directors as an unnecessary pain that gets in the way of his or her focus on running the company. That attitude eventually becomes a fatal flaw. Consider the following but not infrequent dialogue.

 

Non-Family CEO Family Board Member
All this information you ask for, all this education you need, keeps me from doing my job to make you money. Take what I'm doing on faith! Uh oh! That attitude sure doesn't feel right.
(To self: I'd better make these forecasts really conservative and present information such that I have a security blanket for anyh bad surprises.  Otherwise, I risk bein in a position where they will be upset and get more involved. So many times such pessimism; so many times things turn out better, so many times such defensiveness. We can't trust the numbers. We even find outselves distrusting the intent.

 

Many non-family CEOs reason to themselves that they deserve to be trusted and therefore don’t need to be inconvenienced with providing information, education and patience to family shareholders and board. They feel they are working extremely hard and any distractions for boards or shareholders constitute a sign of lack of appreciation, even distrust. The bad cycle amplifies:

untrusting --- untrustworthy concern --- defensiveness --- distrust --- anger

Ironically, the more performance-driven the CEO, the more likely this phenomenon.

Avoiding the cycle or breaking it is tough. The non-family CEO has to genuinely believe it’s worth his or her while to nurture the shareholders’ understanding and involvement. (That’s an unnatural step for a hard driving, results driven executive.)

The family shareholders need to show genuine appreciation---though often almost insatiably--- and really make a strong effort to learn, to study, and to prepare. In fact, it’s this last step, shareholder effort and preparation that is really the best starting point.

Recognizing shareholders as a key and critical constituency requiring thoughtful management is the best starting point. The effort and preparation need for excellent shareholder relations must be seen as an important and meaningful part of the CEO’s responsibilities.

What many non-family CEOs don’t seem to realize is that the investment in shareholder education and relationships with shareholders can strengthen the bond of trust between them. In the long run, that will save the CEO so much time and energy. Unfortunately, insecurity and need for appreciation, the characteristics that may draw the non-family CEO to the family business in the first place, paradoxically can lead to even great frustration for all.

 

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