Leadership

The (Tricky) Shift from CEO to Board Member

You’ve served as a CEO. How hard can it be to be a director? More difficult than you may think.

How to Make the Shift from CEO to Successful Director

After the CEO had led several companies—successfully growing the businesses, expanding into new markets, and boosting share prices—he thought joining a board in the same industry would be a touch less stressful. Maybe he’d even have time to pick up hockey, his old hobby, again.

But that assumption was quickly replaced by two stark realities: He had a lot to learn about being a good director, and the skills that made him a great CEO wouldn’t necessarily make him an effective board member. Indeed, experts say the responsibilities of directors—to provide stewardship and governance—are quite different from those of top brass. “When you’re running the organization and creating a vision for how the company needs to transform, the skills needed to do that can become a bit of a handicap as a director—and not in the golf sense,” says Elise Schroeter, global head of organization and talent strategies for Korn Ferry’s Board and CEO practice.

At a time when companies are focusing more on board effectiveness—and a record number of CEOs are leaving their jobs—the transition from CEO to director has become more complex. On one hand, experts say, boards want former CEOs because they’ve done the job of the person they’re tasked with advising. “When you’ve been a CEO, you can play a unique role as a mentor and coach to the sitting CEO,” says Evelyn Orr, Korn Ferry’s head of CEO and executive assessment for North America.

That said, former CEOs can easily become heavy-handed if they forget that their role is advisory. Navigating the transition can be particularly hard when the CEO joins, as chair, the board of the organization they formerly led. “The worst kind of chair is someone who hasn’t gotten over being a CEO,” says Joe Griesedieck, vice chairman and managing director of Korn Ferry’s Board and CEO Services practice.

So what’s a CEO to do? Here are four ways they need to shift their thinking in order to prepare for the director’s chair.

Shift No. 1: You Don’t Get the Final Say.

For many CEOs, being a strong decision-maker is a wonderful attribute. But when you’re a director, you don’t get to call the shots. Your role is to listen carefully and provide advice and guidance to top management—but not to tell them what to do. “Effective CEOs are results driven, action oriented, and decisive,” says Stu Crandell, senior client partner for Korn Ferry’s Board and CEO Services practice. “As a board member, you kind of have to put those skills in check, because it’s not your job to run the business.”

Many new board members underestimate the implications of making that shift, as it’s human nature to think of what we’d do, Schroeter says, rather than guide someone on how to lead. “If you want to have true enterprise impact and leave a legacy, you need to watch out for that,” she says.

Shift No. 2: A Top-Down Leadership Style Doesn’t Work.

While this style of management has made a bit of a comeback lately, as CEOs under pressure in the current business climate adopt tougher stances (hello, return to office!), a board skill that experts emphasize over and over again is collaboration. Even if the C-suite often functions as a hierarchy, the board is a body of equals. All of its decisions—whether approving strategy, hiring or firing the CEO, or handling governance issues—must be made collectively. And though CEOs can drive collaboration, at the end of the day, boards truly have to practice it.

Shift No. 3: Understand Where Your Information is Coming From.

As a CEO, you’re in the thick of it, receiving information on supply-chain disruptions, go-to-market strategies, and talent gaps. When in doubt, you can visit a team meeting or two to get clarity on issues. But when you’re a director, you’re getting a narrow view of the company—and usually only on a quarterly basis. “Everything shared with the board is highly curated,” Orr says. “You have to learn how to stay informed at the right level.”

To do that, experts say self-learning is critical. If you serve on the compensation committee, for example, understanding financial KPIs used in incentive plans and say-on-pay SEC regulations comes into play. If you want to get a better handle on company dynamics, it’s wise to build relationships with company leaders who present to the board or are invited to board dinners.

Shift No. 4: Think Even Longer-Term Than You Did Before.

While many CEOs say they’re long-term thinkers, it’s board members who really have to take a 30,000-foot view of a company. In the volatile environment of the current moment, scenario planning has become a critical duty for boards navigating Plans A, B, C, and D for supply-chain disruptions, shareholder concerns and tariff implications. What’s more, with so many members of the C-suite handling day-to-day responses to volatility, it’s essential for the board to see around corners and focus on setting a vision for top management. “Your role is to be the bridge between the past and the future,” Orr says.