Trust and CEO succession onboarding: Who is responsible for trust building?

Following the wave of retirements and CEO succession, there is a realization that boards may have taken for granted the trust they had in the Legacy CEO. The implicit trust automatically granted after years of the Legacy CEO's leadership may have led to Board complacency, with a natural, free-flow acceptance of what was presented without meaningful challenge or inquiry. This consistent, ultimately expected behavior from the Legacy CEO over a multiyear history created trust, hinging on the historical and repeatable behaviors.

Enter a new CEO, and the paradigm shifts; the boardroom and the relationship have a meaningful degree of natural uncertainty and anxiety. It is not unusual for board members to feel a lack of trust, which can lead to operational overreach. A common board member sentiment is that time is needed to build trust with the new CEO; yet, most of that trust is often described as one-way rather than a mutual, deliberative practice.

A wait-and-see attitude in the boardroom is not uncommon. It's not unheard of for a board member to say, “I'll wait a year before I start trusting,” “I need to see what the CEO will do first before I start trusting,” or, the most dangerous sentiment, “the last CEO was/was not trustworthy so I won’t trust this one until ____________ (fill in the blank).”

This wait-and-see attitude elongates the onboarding process, potentially leads to stagnation and opportunity risk for the organization, and impacts both the board and the CEO in terms of being a high-performing organization.

Building trust into the everyday Board-CEO relationship is not only possible but mandatory. There's nothing unconventional or exotic; we're talking about ordinary trust, where conversations and commitments followed by meaningful actions are the tools needed. For the board to wait and see what the CEO does to build trust is far from a trusting action and can, unconsciously, instill mistrust.

Building trust is an optional, conscious choice made by both the board and the CEO and requires active engagement in their relationship as they lead the organization. Building trust requires a certain level of skill and commitment far beyond luck or mutual understanding and agreement. The board brings its level of subject-matter expertise, governance, and judgment to the relationship with the CEO, who also brings specific leadership, vision, strategic, and execution skills. Together, they move forward, organizing on the term organizational viability.

What is often unknown or forgotten in CEO onboarding is that both parties must decide to trust, through promises and tacit commitments. Trust is something that both parties in the relationship do and something they make. The mutual choices made by the board and CEO determine nothing less than the kind of relationship and how they will live together in governance and leadership. Too often in our industry, a board stops short of its responsibility in hiring a new CEO; once the hiring decision is made, they believe their work is done. Actually, in many ways, it is just starting. As the new CEO becomes familiar with the organization, assesses strengths and friction points, sees possibilities, and envisions the future of relevance, all of which are needed for the board to be fully present and active in these conversations alongside the CEO.

A carefully prepared and relevant employment agreement protects the membership by outlining commitments regarding governance, terms of employment, performance evaluation, and compensation. The EA is foundational to initiating action to establish trust in the relationship.

New CEOs today come to the table with energy, foresight, futuristic thinking, and leadership skills and expertise to guide and protect the organization through transformative change, external environmental chaos, and hearing the voice of the member. The board needs to bring diverse and engaged governance that shows up in relevant diverse skills and expertise, independent and critical thinking that leads to problem-solving and reduces groupthink, and strengthens accountability of each board member and the overall board as a unit. An act of trust is a high-performing board that will self-assess and elevate the value and contribution it's bringing to the relationship, especially with a new CEO.

Too many CEOs start a new role and realize that they are overlapping what the historical board took for granted as decision-making rights. In the context of the pace of change, complexity of products and services, ongoing transformation, increased regulations, and competitive pressures, the decision-making needs to be refreshed and renewed. The ambiguity about which decisions the CEO can make unilaterally and which the Board must approve creates confusion. When the board is seen as overreaching and the CEO feels micromanaged, the organization is at risk. Before the new CEO is hired, the board needs clarity, in writing, on the CEO's authority, responsibilities, and decision-making rights.

A structured, systematic process for monthly check-ins between the Chair and CEO is an opportune way to provide immediate feedback and build trust. This feedback cadence differs from waiting a year before giving the first performance review. Trust requires ongoing feedback on performance and fulfillment of commitments. This feedback is two-way; the chair should ask the CEO for feedback on what actions and behaviors strengthen trust.

Ultimately, the success of a CEO succession, board effectiveness, and the future relevance of the organization hinge on the conscious, mutual commitment of both the board and the new CEO to build trust. By establishing clear governance authority, maintaining a high-quality board presence, formalizing the relationship through an employment agreement, and instituting a systematic feedback loop, both parties consciously choose to avoid uncertainty and move toward a high-performing partnership. Trust is not a gift passively given, inherited, or received; it is intentionally and dynamically created through consistent actions, communication, and accountability for decisive action and organizational success.