I've sat on both sides of the board table. As a CEO being governed and as a chairman doing the governing. The dysfunction I see most often isn't boards that are too passive. It's boards that confuse governance with management.
What You Need to Know
- Good governance gives the CEO clarity to move fast, not constraints that slow them down
- Boards that micromanage operational decisions create a culture of permission-seeking that kills execution speed
- The board's job is to set boundaries, not to navigate within them
- A well-governed company should feel more agile, not less
67%
of directors say their boards are not effective at providing strategic direction to management
Source: PwC Annual Corporate Directors Survey, 2020
What Bad Governance Looks Like
I've seen boards that require CEO approval for expenditure over $5,000. Boards that want to review every new hire. Boards that debate operational tactics when they should be discussing strategic direction.
The result is always the same. The CEO spends more time preparing board papers than running the business. Decisions get deferred until the next board meeting. The management team learns to seek permission rather than exercise judgement.
That's not governance. It's a bottleneck wearing a suit.
What Good Governance Looks Like
The best boards I've worked with do three things well.
They define clear boundaries. This is the strategic direction. These are the risk parameters. This is the financial envelope. Within those boundaries, the CEO has full authority to execute. No second-guessing, no micromanaging.
They ask questions, not give instructions. "Help me understand the risk profile of this market entry" is governance. "You should enter the market through a distributor" is management. The distinction matters.
They hold the CEO accountable for outcomes, not activities. Good boards don't care how many meetings the CEO had this month. They care whether revenue targets are being met, whether the strategy is working, whether risks are being managed.
The chairman's job isn't to be a better CEO than the CEO. It's to make the CEO better at being the CEO.
Mike Ridgway
Technology Growth Advisory
The Test
Here's a simple diagnostic. After your last board meeting, did the CEO leave with more clarity or less? Did they feel empowered to execute or constrained by new requirements?
If the answer is "more clarity, more empowerment," your governance is working. If not, you're probably managing when you should be governing.
The distinction sounds subtle. In practice, it's the difference between a board that accelerates the business and one that drags behind it.