A Dissenting View

It wasn’t the CEO’s performance that concerned the board. The firm had been delivering strong results since he took the helm two years ago. What got the directors’ attention were the social media posts and news stories. Too many were disgruntled employee comments aimed directly at the CEO, questioning his every step. All of it was distracting enough that directors felt they could no longer give the CEO a pass. They would have to address the issue. 

 Growth and operational performance are still the metrics by which boards judge CEOs, but directors are becoming increasingly conscious of the role talent and culture play in firms—and how that plays out publicly. “Boards understand that if CEOs lose control of the story, they lose the ability to proactively determine the course of business,” says Jane Edison Stevenson, global vice chair in the Board and CEO Services practice and global leader for Board and CEO Succession at Korn Ferry.

 Some might argue that CEOs have already lost control of the story to their employees. Workers today aren’t content to just keep their heads down and do their jobs. They question everything—often very publicly. Sure, employees might have complained in the past. But previous generations of CEOs never had to deal with social media “influencers” commenting on issues ranging from remote work to C-suite bonuses. Indeed, our Breaking Points report in Briefings magazine found nearly 15,000 workers on LinkedIn with “influencer” in their title, an enormous echo chamber. “CEOs are being watched by their employees more than ever before,” says Elise Schroeter, global head of organization and talent strategies for the Board and CEO Services practice at Korn Ferry, “and younger workers are very transparent with each other.”

 While employee-centric issues are typically left to management, rising levels of disengagement and dissatisfaction are becoming board-level concerns. More than 70% of employees report being disengaged at work, and 82% say they are dissatisfied, according to recent data. As CEOs come under pressure from investors to show growth, experts say boards are looking for more visibility into talent issues both to ensure performance and protect shareholders. Some boards are appointing CHROs as directors to address talent and culture issues, for instance. More than 40% of S&P 500 boards have formed new committees or added responsibilities related to human capital, talent, culture, people, or similar issues in recent years. A growing number of boards are starting to tie compensation and incentives for top executives to things like talent strategy, retention, communication levels, and more. “Boards want to make sure talent is considered an asset and is being managed like other major assets are managed,” says Julie Norris, a senior client partner in the Board and CEO Services practice at Korn Ferry.

 Part of the problem, says Schroeter, is that too many boards don’t mirror the culture they seek from the CEOs in the firms they oversee. She says if boards want to help CEOs turn employee dissent into constructive dialogue, they need to set an example. One way they can do that is by rallying around the company’s values and purpose. Other ways to do that include being transparent and authentic, which will help build trust and accountability with the workforce. “The chair needs to model the culture on the board that they want to see the CEO create within the company,” says Schroeter. 

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