Handling Emergencies

By Bill Dann, BoardGrowth Founder

One of the aspects of micro-management (the #1 complaint of CEO’s about their boards) is overreaction to a crisis or non-crisis. Frequent scenario: A juicy rumor (def. a piece of unverified information of uncertain origin usually spread by word of mouth) is received by a board member, who contacts other board members, which then leads to a call for an emergency meeting.

Is it a crisis?
Now, there are conditions in which this might be warranted: i.e., when the source of the information actually observed the situation (vs. second hand information), AND the rumor involves a very serious allegation regarding the CEO, for example, sexual harrassment or worse, unethical dealings with third parties. The only other situation I can think of would be one in which the CEO was already on the ropes, meaning under a condition of formal warning re. his or her failure to properly exercise duties.

Unless one of these is the case, the route of seeking an emergency meeting is uncalled for. Why? It completely disregards and disrespects the CEO; the message being, you are somehow involved or won’t be able to handle this.

You might be thinking, “Really what difference does it make? It’s only another meeting?”

What difference does it make?
First, it does serious damage to a vital resource for effective governance, namely, the quality of your working relationship with the CEO. It communicates distrust, which may lead to distrust back from the CEO, lowered morale and potentially an end to the relationship. Perhaps, all of the above, and for no good reason.

Second, it does the same to the group’s relationship with the chairman. The chair and CEO together manage the agenda coming to the board, and the board inherently trusts that the CEO will not hide vital information, but also not bring day to day management issues to the board. Why? Because they take time away from what should be the board’s focus; namely, strategy and evaluation.

Third, depending on timing, it may not allow the CEO time to investigate the situation, assess it and determine the need for any board action.

Fourth, it impacts the culture of the organization. The board’s overreaction can set a tone of lack of safety in the organization. Rumors of board “witch hunts”, the CEO being on the ropes, etc. all take attention away from productivity and service to customer. Not what you want..

What to do when the rumor hits
So, what should you do in this situation? These are the steps:coffee

  1. The board member privy to the rumor communicates it to the chairman.
  2. The chairman communicates the rumor to the CEO, who is sent out to investigate. The two agree to meet again on what the CEO finds.
  3. The chairman communicates back to the board member who sourced the information that he/she is on top of it and will get back with information as it is made available. The chair communicates the same to other directors who ask.
  4. The CEO and chairman meet to go over results of the investigation and agree on a course of action.

Possible solutions the CEO/Chair can use
Potential courses of action that result from this type of investigation:

  1. The CEO determines there is no valid basis for the rumor, and the matter is closed.
  2. The CEO takes disciplinary action based on findings.
  3. The CEO comes to the board at the next meeting, or in rare instances asks for a special meeting, to ask for a change in policy that responds to the findings.

When it doesn’t work
There are situations in which this action plan does not suffice. What comes to mind is a somewhat long standing pattern or condition in the organization that concerns the board, e.g. too much staff turnover, too many customer complaints. To date, the board has relied on the CEO to handle the situation, but the pattern continues and the board has lost faith in the CEO to turn it around.

Still, the emergency meeting would be a rarity. Rather, again going through the chairman, the board would request that a more aggressive investigation and correction plan be developed, implemented and reported on at the next meeting. There may be instances in which an emergency or special meeting would be called if the time between regular meetings is say, three months.

Interested in hearing from you about your experiences and what has or hasn’t worked. Drop us an e-mail.