How can the Chair perform the role effectively to maintain accountability and high performance from the Board?
Last time we considered the conditions for a high performance board. A critical player in making the Board effective is the Chair. He or she has a crucial role to play both inside and outside the boardroom. The Chair should be a team-builder: ensuring the Board understands the strategy and common objectives; promoting open and two-way communications, facilitating participative decision-making and providing visible leadership.
Managing meetings is critical
The Chair’s role is to create a safe space in which constructive inputs from all board members can occur. The Chair runs the Board and set its agenda. Meetings should be held in conducive locations and should start and finish on time. Agendas should focus on strategic matters, value creation and performance, rather than operational details, which are better delegated to executive managers.
The Chair should ensure that all members of the Board receive accurate, timely and clear information. This should cover both financial and non-financial indicators. This will enable the Board to make decisions based on evidence and properly to discharge their duty to promote the success of the organisation. Information should generally be circulated in advance of meetings to allow reading time.
For each item, the Chair should invite the person leading on it, often an executive manager, to introduce the subject and report, then open up the subject for discussion and debate. Vociferous members of the Board should not be allowed to dominate, particularly if this discourages quieter members from contributing. The Chair’s primary role should be to elicit the views of others and not to manipulate the discussion so that it goes their own way. The sense of the meeting must be ascertained and the outcome documented in the minutes. The Chair must ensure that actions are followed through.
The Chair should manage the Board to ensure that sufficient time is allowed for discussing complex or contentious issues. Board members should not be faced with unrealistic deadlines for decisions. All Board members should be encouraged to participate and offer constructive challenge. One Chair I know always sets homework for individual board members in advance of the next board meeting!
A skilful Chair should encourage feelings to be openly expressed and create a climate of trust and candour. Conflict should be surfaced and handled, with constructive negotiation, rather than personal attacks. Contrary views should not be glossed over. One technique to avoid ‘group think’ and ensure proper debate is to assign the role of devil’s advocate for unpopular alternatives, to stronger members of the group. Or occasionally the Chair could divide the board into two groups to evaluate options.
If consensus cannot be reached on a particular decision, the Chair should consider adjourning the discussion and returning to it at the next meeting. In the meantime, the Chair should attempt to identify the concerns of dissenting directors and reduce differences of opinion. Resisting contrary views may only serve to entrench the dissenter in his views, or even polarise the Board. If agreement cannot be reached, it may be appropriate to go to a vote: this should draw a line under the debate and allow the Board to move on.
The Chair should make certain that the board decides the nature and extent of the risks that it is willing to tolerate in implementing strategy. Sufficient attention should also be given to the composition, skills mix and succession planning for Board roles.
Chair’s role outside of the Board room
A newly appointed Chair should make a special effort to get to know the other board members through one-to-one phone calls or meetings. Valuable insights can be gleaned by drawing out fellow directors’ perceptions of the strengths, weaknesses, opportunities and threats facing the organisation. The Chair may help to facilitate social time in advance or after meetings to enhance teamwork within the group, by encouraging Board members to get to know and understand each other’s background, skills and perspective.
The Chair should take the lead in providing a proper induction programme for all new appointees to the Board (assisted by the Secretary, where appropriate). The Chair should also lead on evaluating the performance of the Board as whole, as well as individual directors, preferably on an annual or biennial basis. The Chair’s performance should be subject review by fellow directors too. Following the review, the Chair should follow through on any training and development needs which have been identified.
The Chair has a crucial role to play in managing communications with the organisation’s stakeholders and ensuring that board members develop an understanding of the needs and desires of customers and employees, investors, funders, as well as regulators. There is a key role to play in dealing with the media, particularly during a crisis, to protect the organisation’s reputation.
What makes an effective Chair?
An effective chair needs self-confidence, usually acquired through experience, good listening skills and charisma, which arises from being simultaneously in control, yet still open to contributions. To lead the board effectively, the Chair must know the directors, their strengths and weaknesses, so that they can be drawn out on relevant matters, or reined in when they are becoming too long-winded. A visible presence, walking the floor, motivating and talking to staff, as well as meeting and presenting to external stakeholders, is important.
The Higgs Review of 2003 found that an effective Chair:
- Upholds the highest standards of integrity, probity and good governance, leading by example
- Sets the agenda, tone and style of board discussions to promote debate and discussion and sound decision-making
- Ensures a clear structure for running board meetings, including starting and finishing on time and spending proportionate amounts of time on thorny and complex issues
- Promotes effective communications, inside and outside the boardroom
- Builds an effective board by initiating change and succession planning for board vacancies
- Ensures that Board decisions are implemented effectively
- Establishes a close relationship of trust with the senior executives, providing wise counsel, advice and support, but at the same time being careful not to interfere with operational management decisions
- Provides coherent leadership of the organisation, including representing the organisation to the outside world and understanding the views of all the organisation’s key stakeholders.
Chairmanship is a challenging role. A good Chair will have a clear vision and focus on strategy, bringing together the disparate skills, qualities and experience of other board members. The Chair should foster a positive culture of corporate governance which then permeates down through the organisation and delivers positive results.
I hope you enjoyed reading about The Pivotal role of the Chair in Ensuring Good Governance. Next time we look at The Board’s role in identifying and managing risk.