Oversight or Overreach: CEO Influence on Board Composition

An incoming CEO — an internal rising star known for driving innovation — clashed heavily with a board that tended to be more cautious than cavalier. Within months of their arrival, friction surfaced and tension grew between the CEO and the board. The CEO felt constrained by a board reluctant to make bold moves. The board, in turn, felt blindsided by strategic decisions made without their consultation.

At one board meeting, the CEO suggested a “new generation” of directors might be needed to keep up with the speed of change. Whatever pleasantries existed before that moment met their demise as the last words crossed his lips. The walls went up, and that one remark, regardless of intent, created immediate resistance. In the board meetings that followed, a new set of questions dominated the discussions behind closed doors: Did we pick the right candidate for CEO? How much control should he have in shaping the future composition of this board? And, is there a risk of overreach eclipsing oversight?

A new CEO brings fresh perspective and vision, but unchecked influence introduces serious governance risks. Organizations must strike the right balance between CEO influence, board independence and long-term governance excellence, starting with a conversation about board composition.

A Traditional Perspective with the Future in Mind

Historically, a CEO’s involvement in board composition has varied depending on governance structures, corporate culture and investor expectations. In some organizations, the outgoing CEO helps shape the board for their successor, ensuring continuity. In others, board appointments are entirely led by independent directors or governance committees, limiting CEO influence. Some companies land somewhere in the middle, allowing new CEOs the opportunity to recommend candidates, but the final decisions rest with the board and/or the shareholders.

While there’s no one-size-fits-all model, best-in-class governance prioritizes board independence while allowing CEOs the opportunity to provide insight into leadership needs. As businesses evolve, so must governance structures. Research from McKinsey & Company highlights a similar sentiment, suggesting governance must adapt to modern business shifts to ensure boards remain agile and future-ready. The traditional approach, centered on financial and operational oversight, is no longer enough. As AI, automation and workforce transformation reshape business strategy, board composition must reflect these new realities.

CEO Influence Must Be Measured

The long-term impact achieved from the composition of the board becomes even more important as we embrace the reality that CEOs change. A new CEO’s vision is important, but a board designed to mirror one CEO’s leadership style may struggle with governance when leadership inevitably changes. Allowing the CEO to dominate board selection poses governance risks that can ripple far beyond their tenure.

One risk is a board created and composed of directors who align themselves extremely close to the CEO’s leadership style rather than objective governance principles — also referred to as board stacking. Boards overly influenced by CEOs may lack the independence necessary to challenge decisions effectively. While this can create alignment in the short-term, it ultimately weakens accountability. A strong, independent board isn’t there to only support the CEO, it exists to challenge, guide and ensure long-term success.

Investor confidence also comes into play. Institutional investors, proxy advisors and governance watchdogs scrutinize CEO influence in board appointments. If the board lacks independence, shareholders may question the integrity of governance structures, and that erosion of shareholder trust can negatively impact stock performance. Empirical analyses from governance studies found on JSTOR suggest companies with less independent boards tend to experience greater shareholder skepticism and weaker long-term performance. Investors want to know that governance structures remain objective, not tailored to a single leader’s preferences.

The verdict? A CEO’s influence should be measured, not left unchecked. A board overly shaped by a single leader’s philosophy risks losing its ability to challenge decisions objectively, ultimately weakening governance. Succession planning plays a key role in mitigating this risk because it requires a board that transcends individual leadership styles, ensuring long-term stability beyond any one executive’s tenure.

Yet, in governance discussions, one critical voice remains noticeably absent — the chief people officer (CPO). While financial oversight and strategic alignment dominate board considerations, people strategy, leadership succession and cultural impact are often treated as secondary concerns. But, if a board is meant to secure long-term organizational success, shouldn’t it also reflect the workforce realities and leadership capabilities needed to sustain that success?

The Missing Voice That Matters

People strategy, leadership succession and cultural alignment are all critical factors to achieve long-term business sustainability. The only way to bring these topics to the forefront of board discussions is to include the CPO. Just as a private equity firm would employ a talent partner to optimize leadership teams for long-term value, boards would benefit from a CPO’s insight into leadership effectiveness, succession planning and workforce strategy. There’s a growing consensus that CPOs should play a more strategic role in governance, as their expertise in these areas directly influences long-term leadership development and organizational resilience. Board initiatives are governance imperatives and HR priorities. If a board exists to secure an organization’s future, it should also reflect the realities of the workforce powering it.

People strategy is business strategy. Board composition limited to financial oversight fails to account for the measurable impact of workforce strategy on business performance. Leadership development, talent optimization and culture aren’t just abstract HR concepts; they translate into productivity, profitability and shareholder value and directly influence revenue growth, cost efficiency and risk mitigation. Workforce initiatives, even if components of a well-aligned workforce strategy, take years to display measurable impact, and their success is heavily influenced by external factors like market conditions, inflation and industry dynamics (i.e., regulatory changes). An experienced CPO or HR leader can address the inherent challenges that arise from workforce initiatives, bridge the gap in understanding on the board and advertise the positive influence a good talent strategy can have on organizational success.

As organizations navigate rapid change, the CPO is able to craft a story — informed by data — to illustrate and explain the numbers behind talent-influenced decisions to board members. Whether it’s the ROI of leadership development, the financial cost of turnover or the bottom-line impact of skills gaps – people strategy is about economic value, not just engagement.

Leadership effectiveness. Bold ideas a new CEO may bring don’t necessarily translate to big results. Do they have the leadership team to execute those bold ideas? The CPO offers a data-driven perspective on executive performance, identifying strengths, gaps and misalignments that could impact strategic execution. Without this insight, a board may lack the full picture of whether leadership is truly positioned to execute bold moves and succeed.

Succession planning and future-proofing governance. No one — not even a CEO — can guarantee organizational stability for future leadership transitions, and that’s where governance comes into play. A board too closely aligned with a single CEO’s vision may struggle when leadership inevitably changes. The CPO ensures that board appointments align with long-term leadership needs, preventing governance structures from being overly tailored to one leader’s tenure.

Boards that fail to incorporate people strategy into governance risk becoming disconnected from the very workforce they depend on. That’s why governance models must evolve — to ensure financial oversight and create a leadership framework that can adapt, grow and drive sustainable success.

The Balanced Approach: Aligning The Big Three

Striking the right balance between CEO influence, board independence and CPO insight leads to a stronger governance structure and is of the utmost importance.

The CEO should absolutely have a voice in board composition, particularly when identifying leadership skills that support company strategy. However, their influence must remain checked to prevent overreach. Final decisions on board appointments should remain with independent governance structures to ensure objectivity. Governance committees must prioritize diversity of thought and independence when evaluating board candidates. Leading a transparent nomination process that prevents new CEOs from exerting undue influence and ensuring CPO involvement are just two ways to strengthen board selection. But, as Deloitte Insights highlighted in a recent report, governance committees with CPOs or HR leaders ensure selected directors are not only financially savvy, but also capable of overseeing workforce transformation, innovation and cultural shifts. Future-ready governance structures must evolve beyond traditional financial oversight. AI, automation and workforce disruptions are reshaping business models, so boards need leaders who understand these changes and can effectively and efficiently guide their organizations through them.