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Blog/July 17, 2018

Characteristics of a Peak Boards Chair

The position of board chair is one of distinction and influence. While it is common for successful executives to move into this role, there are nuanced differences in the type of leadership skills required to be a peak-performing chair versus that of CEO (or other executive-level positions). This blog will describe the characteristics of a truly high-performing chair – what we refer to as a Peak Boards chair – while highlighting some of the differences executives should be aware of when transitioning into this new role.

Before discussing the characteristics of a Peak Boards chair, it is important to clarify the broader purpose of a board. In a 2017 study on corporate governance, RHR identified best practices around four core areas of responsibility: strategic oversight, fiduciary and risk management, CEO performance, and succession and board renewal1. As you can see, these topics are not operationally focused. Rather, they focus on long-term, organizational success that requires intentionality to drive strategic thinking. This strategic advisory role also demands that a true peak board create a collaborative environment where providing advice and oversight to management flows easily. It is through this lens that we will focus on the profile of a strong board chair.

Board-Centric Leadership

To create an environment conducive to tackling a board’s core areas of responsibility, a chair’s focus should first and foremost be on leadership. The chair does not lead the organization; that is the role of the CEO. Rather, the board chair should concentrate on how to best utilize the talents and skill sets of the directors.

An E&C director described true board-centric leadership this way:

Really good board leadership is making sure that when topics come on to the table, whether you’re bringing them to the table at the board meeting or somebody else is, is open, honest dialogue, where your opinions are clear. And then the second part is being an excellent listener to the rest of the group at the table and helping to guide those discussions…but then finding a way to reach some sort of consensus so that the board is giving clear direction to the CEO at the end of those meetings. So it’s not easy to do; but I would say listening, providing opinions, challenging, talking and then ultimately once all these issues have been raised, being decisive about helping the company go in the direction that the entire board believes it should go.”

A picture of board-centric leadership begins to emerge: The chair focuses less on what he or she can add to the board and instead focuses on maximizing the effectiveness of the people and processes that constitute the board. The chair wisely steps into a facilitator role to pull out the unique expertise, competencies and insights from each director. Consequently, the chair tends to speak less and listen more. And when he or she does speak, it often takes the form of prompting through the posing of questions.

It also means the chair is in no way the sole (or primary) voice in the decision-making process. Instead, he or she seeks to make decisions through achieving a consensus view. A good chair is deliberate in getting all the directors prepared to actively participate in board meetings, thus ensuring a productive discourse informed by broad input.

Another component of board-centric leadership is ensuring the processes and procedures inside the boardroom are consistent with the board’s purpose. The chair should be working collaboratively with the CEO (primarily) and directors to determine what topics comprise the agenda. In addition, the chair must ensure that discussions around these topics maintain a strategic, forward-looking focus. We frequently see boards engage in “rearview mirror” thinking, effectively missing opportunities to proactively shape the business’s future.

Another skill set found in Peak Boards chairs is that of practicing shared leadership. Not only does a great chair optimize boardroom effectiveness, but also he/she deploys each director to a committee assignment that taps into the individual’s unique strengths and competencies. There may also be opportunities to pair directors with members of the management team to provide mentoring and coaching. A recent quote from a board member describes how his chair created shared leadership:

Everyone feels empowered to voice opinions, to make suggestions, to make recommendations, to support those recommendations and to drive the board to a consensus. And that has been from leadership from above.”

Clarifying Role Details

There are multiple approaches to how a given organization defines the scope and purview of the board chair’s position. Each comes with unique advantages and challenges, and all are influenced by the degree of involvement the person filling the board chair role has in the management of the business.

  • Chair/CEO – The challenge for a dual CEO and chair is making a clear distinction between the respective roles. It is vital that he or she respect the independence of the board in matters dealing with management oversight. When such issues emerge, CEO compensation, for example, the chair will need to recuse himself/herself to ensure objectivity and open, honest dialogue. The use of a lead director (noted below) can also be helpful when operating under a joint chair/CEO model.
  • Executive chair – In this situation the chair is an employee of the business yet in a position other than CEO. An executive chair often is seen during transition periods when a CEO steps out of that role yet remains active in the organization. Alternately, many businesses begin through the efforts of two partners. Often one will be designated as CEO while the other steps into the role of board chair, bringing a degree of balance to the organization as a whole.
  • Nonexecutive chair – By nonexecutive chair, we refer to the fact that this type of chair is not an employee of the business and hence not a member of the executive management team. Chairs with this relationship to the organization must find ways to deepen their knowledge about the company that they serve. Their degree of engagement between meetings (to stay intimately connected with the organization) becomes vital2.
  • Lead Director – A lead director is an external board member who works hand in hand with the chair to provide leadership to the board. Most commonly, this approach is utilized when the offices of chair and CEO are occupied by the same person. An early-tenure conversation with the chair (and presumably CEO) to clarify roles and responsibilities is critical. One way to look at this role is “first among equals” there to facilitate and plan board meetings and ensure free-flowing communication among all participants in the governance process.

Chair Assessment Checklist

The following represents questions to help provide insight to the efficacy of a board chair. After your next board meeting, use this checklist as a tool to reflect on the meeting and how well the chair fulfilled his or her responsibilities:

  • Were all board materials provided to directors well in advance of the meeting to allow ample time for review and preparation?
  • Was the meeting agenda followed in a timely manner?
  • Further, did the agenda provide adequate time to address the most critical items confronting the business?
  • Were all board members encouraged to participate in the discussion?
  • And if some were reluctant to do so, did the chair seek out their specific input?
  • Were discussions kept at a strategic level (without delving into operational/managerial details)?
  • Were all directors involved in the decisions made?
  • Similarly, even if there were disagreements, did all leave the meeting with a unified front?
  • For open action items, were follow-up roles clearly assigned to the appropriate directors, committees and/or management?
  • Were disagreements addressed promptly and openly during the meeting?

While not all-encompassing, this checklist can provide a snapshot of the effectiveness of your chair. This more facilitative chair’s role is not natural to many leaders. However, when achieved, it provides tremendous benefit to both the board and organization as a whole.



1 “The winning formula profile for a great board,” www.rhrinternational.com

2 Harvard Business Review – “Board governance depends on where you sit”

 

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