The relationship between the Managing Director (MD) or Chief Executive Officer (CEO) and the Board of Directors remains central to effective corporate governance.
However, this relationship is often fraught with challenges that stem from founder dominance, weak board independence, inadequate communication, political influence, cultural deference, and structural governance gaps.
One of the most prevalent issues is founder dominance.
This refers to the continued and often unchecked control exerted by company founders, particularly in family-owned or founder-led firms in sectors such as manufacturing, oil and gas, and financial services, etc. In such organizations, it is not uncommon for the founder to assume dual roles as both Chief Executive Officer (CEO) and Board Chairman, thereby concentrating executive and oversight powers in a single individual.
This CEO-Chairman duality is expressly discouraged under Principle 2.7 of the Nigerian Code of Corporate Governance (NCCG) 2018, which recommends a clear separation of these roles to prevent conflicts of interest, promote effective board oversight, and safeguard shareholder value. The rationale is that a single individual occupying both positions may be less inclined to challenge their own decisions or accept dissenting views, thereby undermining accountability and objectivity at the highest level of governance.
As a result of this dominance, many boards are populated with loyalists, family members, or symbolic appointees who often lack the independence, courage, or professional leverage to question management actions. This undermines the board’s core functions, particularly its ability to evaluate the performance of the executive, mitigate strategic risk, and protect stakeholder interests. In such environments, board meetings risk becoming ceremonial, with limited or no real scrutiny of management decisions.
Board independence, in general, remains another major concern. Although the NCCG emphasizes diversity in skills, experience, and professional attributes, including age, culture, and gender, to enhance decision-making, research conducted by Hussaini, Chechet, Abdulfatah, Maidugu,& Yusuf(2024)indicates that some boards in Nigeria are not constituted with professionals, who possess the requisite expertise or autonomy to challenge executive decisions. This invariably leads to a pattern of passive or ceremonial governance, where board meetings become mere formalities. Without diverse, skilled, and independent directors, Nigerian boards struggle to provide meaningful strategic input or to act as effective custodians of shareholder interests.
The foregoing issue is further exacerbated by the influence of shadow directors–individuals who, though not formally appointed to the board, exercise significant control over board decisions and corporate policy. Under section 868 of CAMA 2020, a shadow director is defined as a “director” and includes a person who is not formally appointed but whose directions or instructions are regularly followed by the actual directors. Thus, such persons exert significant influence over a company’s decisions without being formally recognized as a director.
They often act behind the scenes, manipulating outcomes without bearing formal accountability. Their presence undermines the principle of board transparency and weakens the formal governance architecture, allowing real power to reside outside official structures. The result is often poor risk oversight, compromised fiduciary responsibility, and a breakdown in stakeholder trust.
A related challenge is the issue of communication gaps and information asymmetry. There are scenarios where the CEO or MD controls the flow of information to the Board. These CEOs are, in reality, so influential that the Company Secretary’s loyalty is often not to the Board but to the MD/CEO, with whom he collaborates, to dictate what information the Secretary gives or withholds from the Board. As a result, board members are often presented with curated reports that highlight successes while downplaying risks or underperformance.
This selective information sharing creates a significant disadvantage for the Board, limiting its capacity to make well-informed decisions. Research by Craig Hodges (2021) emphasizes the importance of open, transparent, and two-way communication in building productive CEO–Board relationships. Unfortunately, in Nigeria, many boards receive limited updates outside of quarterly meetings, leaving them reactive rather than proactive in governance matters.
Furthermore, confusion over roles and responsibilities also contributes to strained CEO–Board relationships. There is often a lack of clarity between governance and management functions. In some cases, boards become too involved in day-to-day operations, while in others, CEOs overreach into strategic oversight areas. This blurring of boundaries undermines accountability and fosters tension between both parties. According to iBabs (2023), establishing clear lines of responsibility and mutual accountability is critical to ensuring effective corporate leadership.
Political and regulatory interference presents another layer of complexity. In publicly listed companies and parastatals, board appointments are sometimes influenced by political considerations. Such appointees may owe their allegiance more to external stakeholders than to the organization they are meant to govern. This politicization of board appointments can compromise board cohesion, dilute strategic focus, and undermine the CEO’s authority or cooperation with the board.
Cultural factors also play a significant role in shaping CEO–Board dynamics in Nigeria. The societal emphasis on hierarchy, age, and respect for authority can inhibit open dialogue and constructive dissent within boardrooms. Board members may be reluctant to challenge the CEO, especially if he or she is an elder or high-profile founder. Similarly, CEOs may perceive board oversight as micromanagement or disrespect, rather than a necessary component of effective governance. These cultural norms make it difficult to establish the kind of robust, candid relationship that is needed for effective governance.
Another emerging area of friction is the misalignment of Environmental, Social, and Governance (ESG) priorities. As ESG standards gain prominence globally and locally, especially with regulatory frameworks such as those from the Nigerian Exchange (NGX), many CEOs and boards are not aligned on the strategic relevance of these issues.
While some boards push for greater transparency and ESG integration, executives may view such requirements as burdensome or tangential to immediate business goals. This divergence can create tension and slow down progress on sustainability initiatives. Conflicts of interest are also common, particularly in closely held or founder-led businesses. Related-party transactions, where board members or CEOs have vested interests in external firms doing business with the company, are often poorly disclosed or inadequately scrutinized. These conflicts erode trust and diminish stakeholder confidence in the organization’s governance integrity.
Finally, board inactivity is a widespread issue. Many Nigerian boards do not meet frequently enough, lack functioning committees, or do not engage in continuous strategic dialogue. This inactivity allows CEOs to operate with minimal oversight, reinforcing the imbalance of power and weakening the governance structure as a whole.
In an ideal corporate structure, the Board provides strategic oversight and ensures fiduciary accountability, while the MD/CEO leads operational execution and value creation. A harmonious, transparent, and interdependent relationship between both parties enables organizations to navigate complex environments and maintain credibility with shareholders, regulators, and the public (BoardPro, 2023). This dynamic is particularly relevant in Nigeria, where institutions often grapple with informal power structures, founder dominance, and weak enforcement of governance codes.
Key Dimensions of an Effective CEO–Board Relationship
1. Shared Responsibilities and Strategic Alignment
A well-functioning relationship is marked by clarity in roles, shared accountability, and mutual respect. According to iBabs (2023), both the CEO and the Board share the responsibility of steering the business in the best interests of stakeholders. In Nigeria, where blurred lines between management and oversight can arise, clearly defined roles and strategic alignment are essential to avoid conflict and governance paralysis.
2. Trust and Open Communication
Open, candid, and frequent communication between the CEO and the Board fosters trust and ensures strategic alignment. CEOs must keep the Board informed about major developments, while the Board should be responsive and available for timely advice and oversight (Hodges, 2021). In Nigeria’s highly dynamic sectors like banking, oil and gas, and telecoms, timely information exchange is crucial for managing reputational, financial, and regulatory risks.
3. Constructive Challenge and Feedback
Effective Boards should challenge the CEO constructively, not antagonistically. As Spencer Stuart (2023) notes, strong CEOs actively invite scrutiny and use the Board as a sounding board to refine strategy and leadership decisions. Nigerian corporate leaders must resist the culture of deference and embrace feedback as a governance asset rather than a threat to authority.
4. Balance of Power
A key insight from Singh and Friedman’s study (2011) is that the balance of power between the CEO and the Board is central to corporate success. While an overly dominant CEO can lead to poor oversight, a disengaged or reactive Board can result in strategic drift. This is particularly relevant in Nigeria, where founder-led companies sometimes centralize too much authority in the executive’s hands, thereby weakening Board independence.
Conclusion
In Nigeria, where business success often hinges on leadership credibility and governance strength, cultivating a strong CEO–Board relationship is no longer optional, it is critical. The partnership between a CEO and the Board must be rooted in transparency, trust, shared strategic vision, and open feedback mechanisms.
As local examples like Zenith Bank and Dangote Group demonstrate, and as international cautionary tales like WiseTech confirm, companies that prioritize these principles are better positioned to thrive, adapt, and grow in the face of changing market and regulatory dynamics.
Recommendations
To cultivate strong and effective MD/CEO–Board relationships within Nigeria’s corporate environment, the following best practices and actionable recommendations are proposed for executive leaders and boards alike:
1. Establish Structured Communication Channels: Regular board meetings, strategic retreats, and executive briefings create a rhythm of engagement that fosters transparency and strategic alignment. Communication should be both structured and flexible, thereby incorporating monthly updates, quarterly reviews, and crisis protocols to pre-empt surprises.
2. Clarify Boundaries and Shared Responsibilities: Clear delineation of roles between the Board and the MD/CEO is essential. While the Board provides strategic oversight and accountability, the CEO should be empowered to execute with autonomy. This balance prevents micromanagement and promotes trust.
3. Institutionalize Onboarding and Alignment Retreats: Formal onboarding and periodic alignment retreats should be adopted as standard practice. These sessions allow CEOs and Boards to clarify goals, expectations, and operating styles, helping to avoid early misunderstandings and fostering mutual respect (Spencer Stuart, 2023).
4. Co-Develop Performance Metrics and Review Frameworks: Boards and CEOs should jointly establish clear, strategic KPIs that extend beyond financial metrics to include ESG, risk management, and stakeholder engagement. Regular performance evaluations reinforce accountability and promote continuous improvement.
5. Promote Emotional Intelligence and Relationship Building: Given Nigeria’s relationship-oriented business culture, soft skills such as empathy, active listening, and emotional intelligence are critical. Trust and respect, cultivated through informal interactions and open dialogue, are often more influential than technical expertise in sustaining long-term CEO–Board harmony.
6. Ensure Board Independence and Diversity of Thought: Boards should be composed of independent and skilled directors who are empowered to challenge management constructively. Diverse perspectives reduce the risk of groupthink and improve oversight, particularly in founder-led or closely held Nigerian companies.
7. Adopt a ‘No Surprises’ Governance Ethic: To preserve trust, CEOs must ensure Boards are never blindsided by critical developments. Sensitive information, such as regulatory sanctions, executive exits, or liquidity risks, should be disclosed promptly and directly (Spencer Stuart, 2023).
8. Build Governance Capacity Across Sectors: Institutions such as the Institute of Directors (IoD), the Nigerian Stock Exchange (NGX), and the Society for Corporate Governance Nigeria (SCGN) should scale up programs aimed at improving Board–CEO dynamics, especially in SMEs and founder-led firms where governance maturity is still evolving.
Institutional Attribution:
This article was written and published by the Society for Corporate Governance Nigeria (SCGN), a not-for-profit organization committed to promoting good corporate governance practices in Nigeria and across Africa. SCGN advances its mission through advocacy, advisory services, board evaluations, training, research, publications, and member networking. Its publications include newsletters, corporate governance journals, books, technical reports, and policy briefs. To read more of SCGN publications, please visit: https://corpgovnigeria.org/publication/
