Getting the best from the Chair of the board
Dimension of board effectiveness: Strategic Leadership
The Chair is the leader of the board, and he or she is critical to the Board working well.
But how do you ensure the Chair is working well?
In a nutshell: Any board needs an annual process to review the Chair’s performance. Yet it’s surprising how little attention some boards give to this. There may be a general sense that the Chair is great, and everyone loves him or her, so why bother? Or the Chair may be such a “big” personality that the non-executive directors (NEDs) feel they don’t dare challenge them. Or the NEDs may feel it’s not their role. At government bodies, the Minister or Number 10 generally selects the Chair through the public appointments process. Similarly, at pension trustee boards, it’s often the sponsoring company which appoints the Chair. For this reason, the NEDs may not see a role for themselves.
The Harper Webb view: The NEDs at every single board without exception should be part of an annual evaluation of the Chair. It’s simply too important to skip. Even if the NEDs don’t select their Chair, they should still undertake the process. They are still collectively responsible for the board working effectively for all stakeholders, and having a high-performing Chair is a vital part of that. As for public sector bodies and pension funds, there should be a mechanism for gathering the board members’ collective views and expressing them either to the Minister and senior civil servants or to the Sponsor. Just because the board members don’t get to appoint the Chair, they can and should have influence.
Who does it? For listed companies, it’s the responsibility of the Senior Independent Director(SID). At other boards, it would fall to the Deputy or Vice Chair. If you don’t have any of these positions on your board, one of the directors should lead the process. It’s best if this is someone independent of shareholders or government sponsors to ensure a range of views aregiven equal weight.
What does the process look like?
Consultative: the SID speaks one-to-one to all board members, including executives, to get their views. If the Board is undergoing a board review, the independent reviewer can help the SID to gather views. These discussions should be confidential to encourage contributors to be open and frank with their views.
It’s critical to consult the relevant government departments in the case of arm’s-length bodies, and corporate sponsors for a pension scheme. The owners of a private company should be consulted and, potentially, large shareholders in the case of a listed company. It’s particularly important if there is a sense that the shareholders are not happy with the Chair’s performance.
Collegiate: once the SID has gathered and collated views, he/she chairs a meeting of the board without the Chair present. This is an opportunity for the board members to discuss the strength of their feelings. If there is discontent with the Chair’s performance, a discussion will help determine a common position and agree actions. Even if the unanimous view is that the Chair has no particular performance issues, it’s good to get into the habit of having an annual discussion as a check-in. An individual’s performance evolves over time, sometimes getting better and at other times getting worse. As a Chair reaches the final couple of years of their term of office, the discussion chaired by the SID is also a chance for the Board to consider the way forward.
Candid: following the discussion, the SID gives clear feedback to the Chair on what they are doing well and what their colleagues would want them to do differently.
Uncomplicated: Don’t overengineer it. All you need is a few systematic criteria.
What are you looking for?
Here are 10 Chair competencies for the SID to ask the other directors to consider.
The Chair:
Leads the board to develop clear goals and priorities
Chairs meetings well, managing time with a focused agenda
Introduces discussions clearly and encourages everyone to participate
Creates an atmosphere of trust and openness
Wraps up debates with a clear summary
Keeps the board at the right strategic level
Spends enough time on the role
Provides a good balance of support and challenge to the CEO
Consults and communicates with NEDs, shareholders and other key stakeholders
Maintains focus on refreshing the board and succession planning
That’s all there is to it!
