The chair of the board is pivotal to the sustainable future of any enterprise. They are the central point of leadership in a modern organisation and take ownership of structures, information overload, and constantly shifting societal expectations and demands.
The role itself is fashioned by legislation, regulators, company constitutions and charters, economic dynamics, contemporary practice in boardrooms and the resolution of critical dilemmas and, of course, by the chair’s own personality and experience.
All of these factors ensure that the demands of the job are both nuanced and challenging, but a chair’s real skill lies in their ability to engage with and earn the respect of the board without having to overtly exercise power.
The chair is a meeting point of diverse interests and shapes strategic direction and priorities, connecting with board members in a way that builds upon each member’s strengths, without encroaching on the CEO’s function. Although this distinction is subtle, it is essential to apply.
In short, the chair’s primary function ensures that the board operates in a manner that is conducive to the achievement of outcomes guided by the mission of the organisation. This necessitates a chair who plays an active role in crafting positive board culture, which means navigating three pivotal concerns:
1. Making mission the guiding principle
2. Finding pathways through value dilemmas
3. Strategy driven by engagement.
1. Making mission the guiding principle
Organisational purpose and mission are inextricably linked, making them a domain that the chair must exclusively get right.
A clear sense mission is the guiding principle for hiring, supporting and evaluating the CEO, and realising the alignment of strategic objectives. It is only through such an alignment that other factors can come into play, such as sound financial management, continual enhancement of organisational performance, and ensuring a mature mindset of accountability and responsibility.
Strengthening the organisation’s sense of purpose and mission cements the relationship between the chair and CEO and also positively directs the behaviour and contribution of the staff and management.
By safeguarding the organisation’s mission, the chair maintains the trust of shareholders and the community. Now the board, in collaboration with the CEO, can meaningfully engage in ongoing planning to ensure that the vision remains relevant, goals are defined, and objectives reference the mission as a guide. This type of discipline encourages an effective evaluation of the organisation’s strategic goals and progression towards mission success. By focusing on the mission, the chair elevates the board to become respected guardians and trustees of the organisation’s welfare.
2. Finding pathways through value dilemmas
The board’s scrutiny of strategy, reputation and risk needs to be evident as directors are increasingly being held to account as the ultimate protectors of an enterprise’s value. Board success is not only measured by the organisation’s quarterly profit declaration, but also by sustainable growth and through not becoming front-page news for any perceived or real wrongdoing.
On the values front, it is the chair who must visibly take the lead. They are responsible for installing sound values in the boardroom and throughout the organisation. However, by adopting values as part of board duties tensions inevitably arise.
During mergers and acquisitions (M&As) the board has legal obligations towards confidentiality and a duty of care to its employees in terms of transparency. In a perfect world, what’s right or wrong is clear, but in the real boardroom matters are often far more opaque.
The board is the ultimate point of referral for significant problems and dilemmas. The only alternative option is the courts. It is the chair who needs to find a pathway forward. M&As, restructuring, enabling an alignment of competitive advantage when the management are divided—all are issues which bring dilemmas the chair has to address into sharp focus. Finding the “right” way forward is demanding and time-consuming, and the process is often subjective and context-dependent.
In order to balance misaligned interests the chair’s sound judgment and resilience should be directed towards pursuing what is right and making a critical difference. They can be driven by neither fear nor favour on their decisions and behaviour. This is often easier said than done.
One particular challenge is how to sack the operationally high-performing CEO, who may be effective at generating monetary value, but at the same time demonstrates a dominant and bullying approach which undermines the enterprise’s culture and potentially sets up a successor to fail.
Shaping the board into a well-performing unit takes more time than expected and the chair needs to balance the needs and interests of multiple stakeholders and personalities.
Being the chair can prove to be a lonely experience, in part because of limited support and also because the chair is the ultimate point of referral and therefore unable to share their concerns with others within the organisation. The chair needs to ensure that the interests of all stakeholders’ groups are taken into account and that, in the short and long run, their interests are served to the best possible extent.
The responsibilities of the chair are inherently complex, needing to satisfy multiple objectives while facing numerous constraints. Critical is to ensure that board decisions are felt to be well-considered and fair, even when they may not be to everyone’s liking. The combination of hard, analytical skills with the sensitivity for political negotiation are critical for effective performance as chair.
3. Strategy driven by engagement
The chair leads the board through successes, crises, CEO successions and performance and shareholder communications. By necessity the chair facilitates the board’s strategy for engagement, creation and delivery. In fact, our ongoing global Kakabadse board studies clearly show that the management own the strategy, but the board owns the culture.
This implies that the board is not limited to reviewing, challenging or concurring with management on strategy. They engage at a much deeper level to identify fracture points—the position in the organisation’s structure where strategy derails. Such fracturing often occurs at the general management level, particularly a country head or subsidiary MD who feels that a corporate-centred strategy is unworkable. Corporate-driven competitive advantage may be insensitive to local nuance, resulting in damaging tensions that can tear business units and the centre apart. As a result, increasingly complex and disruptive business conditions demand greater board engagement with strategy delivery. Investors and other stakeholders expect this.
The simplest part of all this is the board’s strategy evaluation. More demanding is the reconciliation of different notions of competitive advantage shaped by localised customs, practices and needs. The chair has the opportunity to uniquely position the board to create the “right” level of engagement that facilitates discussion on strategy and its delivery between the board, the C-Suite and the general management.
The extent of the board’s engagement in strategy varies considerably, depending on the style and philosophy of the chair as well as the chair-CEO dynamics. It is a truism that chair-CEO interaction is a primary and determining factor in finding the right level of engagement with strategy delivery.
So much depends on the chair taking the lead on shaping of strategy and its delivery as conditions change. Monitoring, and by implication mentoring, whether critical alignments are maintained between different interests is part and parcel of the same process.
The chair needs to champion diverse thinking in the boardroom and make it an acceptable condition to take different perspectives on board and enhance the efficiency and effectiveness of strategy creation and delivery.
Chairs, through the quality of their judgment and interpersonal skills, which includes the ability to manage conflict, ensure that their decisions are well informed enough to create a board culture where engagement with strategy is highly valued by the management. The chair’s patience, resilience and wisdom are crucial to engaging multiple misaligned interests.
This does not mean that the will and interests of senior management are ignored or overridden. Rather that the engagement process draws in and respects alternative perspectives. Inevitably the chair will sometimes display inconsistent behaviour in order to accommodate these varying demands, but they are consistently driven by the mission and deep seated values of the enterprise.
Given all of this it is little wonder that the chair is pivotal to organisational success, which begs a final question—why are they paid so little?
Nada Kakabadse is professor of policy, governance and ethics, and Andrew Kakabadse is professor of governance and leadership at Henley Business School.