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How to be a good board chair

You don’t have to croon like Sinatra to be ‘Chairman of the Board’, but Lisa Smyth learns that there’s more to the role than industry knowledge and leadership skills.

While not all CEOs will become chairperson of the board, it’s safe to say nearly all board chairs have CEO experience. Last year’s Heidrick & Struggles Board Monitor report found that nearly half of new board appointments to Fortune 500 companies were current or former CEOs, and that 75% of appointees had previous board experience.

And, while many companies, especially in the US, appoint their current CEOs to act in a dual role as chair of the board, the responsibilities of each are vastly different. The CEO is responsible for the leadership and management of the organisation, and for implementing its strategic vision, while the board chair is required to effectively lead the board of directors to enable it to function as the highest decision-making body in the organisation. Former Dayton Hudson CEO Kenneth Dayton said it best: “Governance is not management.”

So, if you find yourself in the board chair position, what exactly should you do? And, what sets good board chairs apart from great board chairs?

Support the CEO

“One of the key roles of the chair is to support and be a sounding board for the CEO,” says Wendy Morris, Chair of the Board for Tourism Tropical North Queensland. “I have a very close working relationship with the CEO. The CEO and the executive team are the ones who actually execute the strategy, but it’s the board that sets the strategic direction in a way that’s appropriate for the organisation.”

Speaking to the Harvard Business Review in 2013, former SEC chairman and Aetna CEO William Donaldson insisted that one of the most important functions of the board “is to insulate the CEO from short-term considerations”.

Lead, but don’t rule

“Generally you want someone who is going to lead the board, but not rule the board,” explains Rowena McNally, a Fellow of the Australian Institute of Company Directors, who has been chairing boards for almost 25 years. “That older model of a very dominant chair has largely disappeared, thankfully. You are essentially the conductor of the orchestra – there to make sure things run smoothly.”

Earlier this year, the INSEAD Corporate Governance Centre launched a research project that surveyed 200 board chairs from 31 countries, who all largely agreed. When asked to describe chair behaviours that lead to productive board sessions, answers included ‘restrained’, ‘non-domineering’ and ‘leaving room for others’.

Ensure diversity of voices

Diversity and representation of women and minorities is front of mind when discussing the make-up of boards in today’s world. While small gains have been made, Heidrick & Struggles estimates that gender parity will not be achieved until 2032.

But, the board chair rarely has sole control of the appointment of directors. What they can control is who gets to speak. “A chair needs to ensure that there is broad thinking among the group and that diverse perspectives are brought to the table. While it’s important that you have very strong industry knowledge, experience and input, sometimes the board need to think outside the square and I think a chair’s role is to ensure that everybody contributes,” emphasises Morris.

McNally agrees that the role must “encourage contributions and help the board avoid groupthink. The chair sets the culture of the board and the tone for how everyone treats each other. Bullying cannot be allowed at board level or it will permeate to the rest of the organisation”.

Step back

With so many board chairs coming from CEO backgrounds, and some even functioning in both roles, there can be confusion about where one role ends and the other begins.

Morris finds the temptation to help run the organisation a common challenge. “I think if you’ve come up from the C-suite, it’s very easy to want to jump in and get involved in the execution of strategy. But, it’s really important that there’s a clear line that separates the executive team from the board and from the chair. Stepping back is something that I need to frequently remind myself of. The chair and the board is about oversight, not actually doing the work.”

In order to deal with the obvious conflicts that arise when one person holds both roles of chair and CEO, a new role has emerged in recent years among large, global companies. About half of Fortune 500 boards have appointed a Lead Director to supplement the leadership of the person in the combined role of board chair and CEO.

But, ultimately, you can end up losing the most important role of the chair. “When the roles are combined there are no real checks and balances. No oversight. And the most important role of the chair is to ensure the integrity of the board,” notes McNally.

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