When a company starts to struggle, all eyes turn to the CEO. Shareholders demand results, employees seek direction, and internal contenders begin analyzing vulnerabilities and positioning themselves for the top job. There’s a strong expectation for the CEO to resolve the problem or face removal. But not always in the boardroom, where directors are reluctant to make bold, decisive moves and instead engage in drawn-out debates that sidestep critical issues. Even in the face of recurring underperformance, many boards choose to retain their CEOs for extended periods.

Consider the recent case of Boeing, where, despite multiple public setbacks, Dave Calhoun remained in the CEO role through more than four years of declining performance. Similarly, Ginni Rometty led IBM through nearly a decade of revenue losses and declining stock performance before retiring, and Jeff Immelt stayed in the top job at GE for 16 years while the company’s stock value plummeted and the financial viability of many of its businesses deteriorated to such a degree that his successors had to stage a multi-year turnaround and split the company.

These cases are not isolated. Research shows, in fact, that CEOs are seldom dismissed when the company they lead underperforms. CEOs can wield considerable power over the board, in particular when they hold a significant ownership stake. This influence may be further strengthened by directors who share friendship ties with the CEO or feel a sense of loyalty toward them, particularly if the CEO was responsible for their appointment to the board. This prompts a key question: How can boards more effectively enforce CEO accountability in the face of poor performance?

We recently undertook a large-scale quantitative research project that analyzed boards of 865 U.S.-listed manufacturing firms between 2010 and 2020, and our findings point to an often-overlooked source of accountability principles: the military. About a quarter of sampled firms’ boards includes at least one military director, with some having two or more. Military directors are found not only in defense, where they are naturally expected, but across a wide range of other industries. Boards with directors who have military experience, we found, are more decisive in addressing CEO underperformance, often opting to dismiss the CEO when necessary.

In our view, this approach aligns closely with the demands of modern corporate governance. Which made us wonder: What can directors with military experience teach boards about CEO accountability?

Three Lessons

To answer this question, we interviewed more than 30 directors who collectively have served on the boards of nearly 50 publicly listed companies, and in distilling what they told us, we’ve devised three practical lessons for any board looking to strengthen CEO accountability.

Be clear about responsibilities.

All too often, boards define responsibilities vaguely, allowing CEOs to take credit for successes driven by luck, market developments, competitor missteps, or even the efforts of their subordinates. Those same CEOs often evade accountability for failures by shifting blame for missed performance goals to others or external circumstances. Military directors we interviewed, however, highlighted a contrasting approach: Roles and responsibilities for officers in the military are defined with precision, which ensures accountability for successes and failures in their domains of responsibility. Each mission assigns leaders clear tasks (what needs to be done) and a purpose (why it matters), so that everyone understands their immediate responsibilities and the broader strategic impact of their role.

Corporate boards can follow that example by breaking CEO responsibilities down into specific, measurable tasks that are tied to broader corporate goals. For example, boards can develop a CEO accountability document that clearly outlines key objectives, performance metrics, and expectations for managing resource, while also establishing a timeline for regular reviews and updates. This granular approach moves beyond binary assessments of success or failure and allows boards to perform detailed assessments of the decisions a CEO took, how they managed inputs, and how they leveraged their leadership team and other resources — which, in turn, will foster greater accountability.

Be transparent in performance evaluations.

Boards often shy away from candid discussions about CEO performance when the CEO is present, fearing that such discussions may undermine the CEO’s authority, standing, or morale. And during board executive sessions, directors rarely dare to ask open questions and engage in open discussions about the CEO’s performance. Rather, discussions about the performance often happen in hallway conversations between individual directors. This lack of transparency leaves the CEOs of underperforming companies in the dark about where they stand and gives them limited opportunity to address perceived performance issues.

Military practices offer a contrasting model. Performance evaluations in the military are systematic, transparent, and integral at all levels. As we repeatedly heard from directors with military backgrounds, military personnel are fully accustomed to performance evaluations. After-action reviews assess performance during specific missions, and broader annual evaluations ensure continuous learning and improvement. These processes not only clarify expectations and enhance accountability but also identify areas for development.

Boards can follow that example by setting clear, measurable goals for the CEO and establishing transparent evaluation criteria at the start of the fiscal year. Regular, quarterly reviews of these goals create an opportunity for open dialogue, making performance evaluations a routine practice rather than a sign of trouble. Decisions and projects should be reviewed through post-mortem reviews not only to assess their performance but to derive lessons for the future. Such transparency fosters high-performance standards and reduces defensiveness, promoting a learning-oriented culture. By asking tough but constructive questions during these reviews, boards can hold the CEO accountable and, if the CEO provides honest, comprehensive answers, can provide the necessary guidance and support. This reduces defensive behavior and promotes a learning-oriented approach to problem-solving.

Intervene early and decisively.

When boards let problems linger, those problems tend to get worse. Indecisive boards lose opportunities for course correction, and deeper organizational crises can develop. Military directors have been trained to avoid this by addressing problems early and decisively. One of the key principles in the military is the “commander’s intent,” which defines the desired mission outcome and what success looks like. This clarity empowers leaders to adapt their actions to changing conditions while maintaining focus on results. Importantly, it also helps identify early warning signs of problems, enabling swift and decisive intervention.

Boards can follow that example by proactively seeking signs of CEO underperformance. Rather than moving from challenge to challenge without ever stopping to reflect, boards should instill a culture of reflecting what has gone wrong and taking corrective action before the problem escalates, let alone re-occurs. For example, as one director we interviewed suggested, the board and the CEO might mutually agree on a “no surprises” policy, wherein directors expect the CEO to flag potential issues — even if they seem minor — to prevent escalation. Early intervention allows boards to work collaboratively with the CEO to resolve issues and get back on track. When it becomes clear that the CEO is either unable or unwilling to resolve a crisis, boards can take decisive action, including dismissal, to prevent further damage. Overall, this approach minimizes organizational disruption. This benefits not only the firm but also the CEO, because prolonged poor performance can irreparably harm a CEO’s credibility and prospects of finding another top-level job.

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Corporate and military organizations operate in very different worlds, and we’re obviously not suggesting that boards march to the beat of military management. Not all military principles are applicable to the boardroom. That said, our research shows that, quantitatively and qualitatively, the military principles we’ve discussed in this article have considerable value for corporate boards, especially those that want to foster accountability.

It’s no coincidence, for example, that in early 2024, shortly after high-profile incident in which Alaska Airlines flight 1282 lost a door mid-air due to missing door plugs on a Boeing 737 MAX, Boeing appointed Admiral Kirkland Donald as special advisor to the aerospace-safety committee of its board with the explicit goal to help investigate management practices. “By appointing Admiral Donald,” Boeing noted in a public statement, “the company aims to demonstrate its commitment to transparency and accountability.” Those are principles that boards can embrace even if they don’t appoint directors with military backgrounds — and if they do, they can transform CEO accountability into a strategic advantage.

Джерело: https://hbr.org/2025/02/research-how-boards-can-increase-ceo-accountability