Public discussion about founder leadership prompted a question I would put to any board whose company is closely associated with its founder. If a credible concern involving the chief executive came to light, could directors assess it independently and act on their findings?
I explore that question through a hypothetical board scenario. I start by asking who has the authority to decide and what they would need to exercise that authority in practice.
A board may have the legal authority to replace the CEO. If directors lack access to reliable information, a credible successor or a workable transition plan, that authority can be difficult to exercise. For me, that gap is where the governance question begins.
ISO 37000:2021 places organisational purpose at the centre of governance and identifies oversight and accountability as foundational principles. I use those principles here to ask whether the board’s arrangements help the organisation pursue its purpose when the decision concerns its most influential person.
1. Separate the founder’s roles before assessing their influence
In this scenario, I would start by separating the founder’s influence as chief executive from any authority held as a director or shareholder. A founder may occupy all three roles at the same time. I would map the authority attached to each role. Who can appoint or remove the CEO? Who can appoint directors? What influence comes from shareholding, voting arrangements or rights in the company’s governing documents?
The answers depend on the applicable law and the company’s arrangements.
I would also look at where influence sits outside those documents. Suppose a board can replace the CEO but believes a major investor will withdraw support if it does. That possibility deserves consideration. I would want to know what evidence supports it and what the company could do to manage the consequences. An assumption about how investors might react can narrow the board’s choices before it has properly considered them.
2. Look at what independent directors can actually do
The G20/OECD Principles call for boards to exercise objective, independent judgment. In practice, I would look at how directors get information and what happens when they disagree with management.
Suppose the independent directors receive information that warrants a closer look. Can they convene without the CEO? Can they obtain records directly and, where appropriate, appoint their own advisers? The UK Financial Reporting Council’s guidance gives the chair a role in creating room for that kind of challenge, including through meetings of non-executive directors without executives present.
The board might conclude that the information warrants no further action, or it might commission an independent review. I would look at the decision record to see what directors asked management to clarify, how the answers affected their decision and how they handled any conflicts.
That is how I would apply ISO 37000’s oversight and accountability principles to a founder-led company. Directors need to examine how they oversee the authority they have delegated, especially when a senior executive’s influence makes it harder to hear concerns.
3. Connect concerns about conduct to the company
I would start by asking what the board can substantiate and how the matter could affect the company. If the information is incomplete, directors can identify what they need to establish before deciding whether a review is warranted.
If the matter warrants a review, I would ask who can assess it independently, how that person would obtain the information they need and how the CEO would have a fair opportunity to respond.
The board’s response should reflect the evidence and the seriousness of the matter. If directors decide to retain the CEO, I would expect the decision record to show what they considered and why they reached that conclusion.
4. Test the succession plan against a real working day
Both the OECD Principles and the UK Corporate Governance Code address succession planning. The test I would put to the board is straightforward. If the CEO became unavailable tomorrow morning, who could run the business that afternoon?
For a technology company whose founder is closely associated with its direction, I would also ask who can explain the product strategy and maintain confidence among employees and business partners. An interim successor may be named in a document. Could that person explain the company’s priorities and lead the executive team through the transition? Would key customers and lenders know whom to contact? These questions reveal where the company depends on personal relationships and strategic knowledge that a succession chart may miss.
ISO 37000’s principle of viability and performance over time gives me a way to frame the issue. In a founder-led company, I would apply it by asking whether the business is developing enough leadership depth and sharing enough knowledge to operate through a transition. A board can work on those dependencies while the founder is still in place.
5. Reduce dependence on the founder before the board needs to act
The question I would bring back to the board is how much of the company’s direction, stakeholder confidence and leadership credibility rests with the founder personally. If the board had to consider a change in leadership, would concern about how the business would cope limit the options directors felt able to consider?
I would look at whether the senior leadership team can explain and carry forward the strategy, whether it has established relationships with key stakeholders, and whether directors have enough direct exposure to potential successors to assess their readiness. These are practical ways to apply ISO 37000’s emphasis on viability over time.
Returning to the board in this scenario, I would assess how it reached its decision. Could directors establish the facts independently? Did they have a workable alternative if a leadership change became necessary? If they decided to retain the CEO, could they explain why that decision served the company?
The time to build those options is while the founder is still leading the company, when there is room to share knowledge, develop successors and test how the leadership team would operate through a transition.
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