Elephant in the Room - Part II

In a recent article, we highlighted the fact that a recent Halex Consulting / Board Benchmarking analysis of 500 boards found that 25% are dysfunctional (a likely underestimate). 

A second key finding of our analysis was that it is not possible to have an effective board without an effective chair. 

Given the criticality of the chair’s role, what qualities should we expect of a good chair, and what should the role encompass?

Qualities of a good board chair

Unfortunately, we often find chairs inherit the role on the basis that they sit on several boards, have lots of ‘experience’ and get on with the other board members. 

While helpful, these are not the most appropriate selection criteria.  Rather, the key (CLASSIE) traits of an effective chair include:

• Communication skills – Clear and effective communication with the board, CEO and external stakeholders.
• Leadership – An ability to lead, motivate, and unify the board.
• Adaptability - Flexibility to adapt to changing circumstances and challenges.
• Strategic thinking - Visionary thinking and the ability to guide long-term planning.
• Sound judgement - Collegiate decision-making and an ability to gain board consensus in resolving issues.
• Integrity - Upholding ethical standards and transparency.
• Empathy - Understanding diverse perspectives and fostering a collaborative environment.

The role of the board chair

According to the Financial Reporting Council 's UK Corporate Governance Code, the role of the chair is to provide leadership, promote effective governance, and ensure the board operates in the best interests of the company and its stakeholders.

Putting this into context, Julie Garland McLellan suggests in a recent LinkedIn post that, ‘Good chairs invest time and effort, building the relationship between the board and the CEO, representing the company to investors and other stakeholders, understanding the strength and weakness of the business model and the strategy, building the board and ensuring it works as a cohesive team’. 

A similar view is expressed in a recent whitepaper by our Board Benchmarking colleague and New Zealand strategic partner Richard Westlake . Richard proposes that the chair’s role should be defined by the vaguely Scottish sounding acronym MCBED:

• Meetings - The chair is responsible for organising effective board meetings, setting agenda, and ensuring meaningful discussions. They must manage time efficiently and foster an environment where diverse opinions are explored and critical decisions are made for the organisation's advancement.
• Chief Executive - Managing the relationship with the Chief Executive is crucial, balancing professionalism with trust. The chair should guide without overstepping into personal friendship, maintaining the necessary professional distance while ensuring a productive partnership.
• Board - The chair should build and develop a diverse and effective board. This involves encouraging professional development, evaluating performance, structuring committees optimally, and managing succession planning.
• External stakeholders and shareholders - Modern chairs must engage actively with external parties, communicating effectively and understanding the organisation's operational reality. They should build trust and prepare for transparent dialogues during challenging times.
• Director - While facilitating board activities, the chair must remember their role as a director first, contributing insights without dominating discussions. They should ask critical questions and add value without acting as the CEO's defender.

Conclusion

It’s perhaps unsurprising that our analysis of 500 boards found that it is not possible to have an effective board without having an effective chair.  But what becomes clear is that the role of chair is not simply an honorary position – it’s a demanding role requiring significant skills, expertise and time commitment. 

Board chairs seeking to improve should focus on enhancing these qualities, actively engage in self-evaluation, and seek continuous education and feedback.

From personal experience, we often find that good chairs benefit from discrete use of an outside advisor acting as an independent and objective ‘sounding-board’ and informal board coach.

If this is an idea you would like to explore further, please drop me an email in confidence chris.burt@halex.uk.com