Boeing affair casts spotlight on changing role of board chair

2005

The departure of Boeing boss Harry Stonecipher over an office affair is the by-product of increased top-level scrutiny and shows how pivotal the relationship between the chairman and CEO has become in the modern day boardroom, a consultancy has suggested.

Stonecipher, 68, was fired this week for conducting an extramarital affair with one of Boeing’s female executives.

While the relationship had not directly impinged on how he ran the business – the woman did not report to him and there was no preferential treatment involved – he had had to go because of the question mark it put over his judgement.

It has also been suggested Stonecipher ironically fell foul of his own drive to improve ethical standards at the company.

Boeing chairman Lew Platt said the facts of the affair had “reflected poorly on Harry’s judgement and would impair his ability to lead the company”.

He added: “The CEO must set the standard for unimpeachable professional and personal behaviour and the board determined this was the right and necessary decision under the circumstances.”

The scandal showed how important it was for the relationship between the chief executive and chairman to be completely transparent and upfront, argued Steve Wigzell, partner at board performance experts the Change Partnership.

“The chief executive should have a relationship with the chairman that allows him to own up to things like this and get guidance,” he suggested.

Increased scrutiny of boardroom activity was changing the relationship between the top two, meaning it was now much more up to the chairman to shine a light on the performance of the board and the conduct of its officers, he added.

“There needs to be mutual respect and trust between the two. The best relationships are characterised by openness but where things are not so cosy that the chief executive simply gets back what he wants to hear,” Wigzell said.

Last December research by the Change Partnership found that eight out of 10 directors felt the quality of the relationship between the top two players was the decisive factor in what made a great chairman.

Good chairman also needed strong interpersonal skills, self-awareness and empathy, the study suggested.

They needed to be open to challenge and debate, and to be able to promote independently-minded input from all directors.

"You need to be able to say what you mean, mean what you say, be straight and keep open the lines of communication,” advised Wigzell.

The Stonecipher affair was also a striking example of a company’s ethical policy being more than just a worthy piece of paper, said Paul Toyne of consultancy Article 13.

"Now everyone in Boeing will know it is a requirement for the CEO to set unimpeachable professional and personal behaviour,” he explained.

"In our experience, ethical codes must also be devised in consultation with those who have to live and breathe them if they are to work,” he added.