The departures of CEOs at Adidas, Volkswagen and Fresenius show that the premature termination of contracts is an embarrassment for the supervisory boards. The supervisory boards of large German corporations are increasingly failing in their personnel selection and as CEO controllers – these are the headlines.
But is that actually the right understanding of the task? There is no question that their sharpest sword in governance is the composition and remuneration of the board of directors.
However, in view of the many formal requirements, there is often a lack of focus on the essentials: the leadership skills of the CEOs and the cooperation in the management team.
In the event of management problems, supervisory boards quickly invest in externally effective personnel changes instead of constructively addressing the management work of the CEO and the cooperation in the board of directors.
The topic of cooperation is actually mentioned in the German Corporate Governance Code: “Good corporate governance requires an open discussion between the Management Board and the Supervisory Board as well as in the Management Board and the Supervisory Board.”
But the fatal short circuit that we see: If the composition of the board is set, it will work out with the cooperation. This assumption is wrong.
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Because effective executive teams are a rare species. The reason? At the top, there is a logic that we call the top-team paradox.
The individual strengths of top managers by no means add up to a collective strength in cooperation and leadership. On the contrary: strengths such as the will to succeed and assertiveness are counterproductive among alphas and make working together more difficult.
Under pressure, successful managers develop patterns of behavior that are destructive to collaboration. Kai Dierke, Anke Houben, and Philine Erfurt Sandhu
Alpha managers are a double-edged sword for companies: They are an indispensable resource – powerful, assertive, highly ambitious, reliable – and at the same time an incalculable risk.
Because under pressure, successful managers develop behavior patterns that have a destructive effect on cooperation. Strengths tip to the extreme and fuel hidden or visible rivalry: decisiveness can tip to actionism, focus on results to silo thinking, fighting spirit to dominance or analytical strength to dogmatism.
Paradoxically, individual competence creates a collective weakness. That’s the crux: The very strengths that have made the alpha managers successful must be unlearned and tamed if they want to be successful as a board team.
The top-team paradox is a practice experienced every day at the highest management levels and lamented by those familiar with it – and yet it is rarely questioned by the supervisory board.
New skills are in demand: the CEO as Chief Enabling Officer
The CEO plays a key role in collaboration. Under the leadership ideal of a combative management team, the core task of the CEO is to actively manage doubts, openness and reflective dialogue in the team.
The globally most successful CEO, Satya Nadella from Microsoft, also sees his task as creating productive cooperation in his team and living out the leadership culture as a role model.
Especially in view of global upheavals, it is high time to change the CEO: from Chief Executive Officer to Chief Enabling Officer.
This role change and skills such as the ability to reflect, openness, both-thinking and willingness to learn are hardly considered when making appointments to the board. Instead, the focus is on formal criteria: industry expertise, technical expertise or track records.
Boards need to encourage more board collaboration
A structured process is important to break the pattern of selecting the same type of board position. But ordering different profiles is not enough.
Especially in disruptive times, the credo of the US management consultant Jim Tamm counts: “You cannot compete externally if you cannot collaborate internally.”
In order to ensure the “open discussion” in the board of directors, as stipulated in the duties of the supervisory board, leadership and cooperation in the board of directors team must be put to the test – and with it the sometimes outdated understanding of leadership of the supervisory board members themselves.
This is exactly the blind spot of the supervisory board. They don’t realize what it takes for the ability to collaborate: team development in the committee and the selection of leaders who are confident enough to question their behavioral routines.
Supervisory boards should specify and set an example for these requirements. But that requires that they not only address their blind spot in board oversight, but also shed light on their own blind spots—a double developmental task.
The authors: Kai Dierke and Anke Houben are founders of the management consultancy DierkeHouben Leadership Advisors. Philine Erfurt Sandhu is a lecturer at the Berlin School of Economics and Law.
More: “Supervisory boards no longer primarily control, we advise and give impulses,” says Clara Streit, member of the multi-supervisory board and former McKinsey consultant in an interview