“A corporate board of directors can create tremendous value for a publicly-traded company. However, an absence of leadership can destroy it.” – Wharton University of Pennsylvania
Regardless of the type of board, leadership around the board table is far from obvious. While there is one individual appointed as leader for the board, there are typically many leaders around the table. It is also common for board members not to be clear about the responsibilities of the Chair, including the Chair herself and the CEO.
Years ago, the positions of Chairman of the Board and CEO used to be held by the same person for a private board and a corporate board, except in unusual circumstances, such as during a CEO transition. Nowadays, for good governance, the position of the Board Chair and the CEO should be two different people. This can create relationship and dynamics challenges, as well as potential confusion in the ownership of the responsibilities.
Here are 10 steps you can take towards being a great Board Chair:
- Be clear about your role and the roles of others. As Chair, yours is the overall leadership of the board. The chair is responsible for ensuring that the board is well governed and that it has clear processes, understood by all members when dealing with critical issues. (Boards must have processes in dealing with issues.) Own this, and make sure that everybody around the table knows your role and their roles, including the CEO’s role at the board table (or the Executive Director for a non-profit board).
- The Chair and the CEO must work together, not against each other. The CEO leads the management team and is an executive board director, a member at the board table; the Chair leads the board.
- Set standards that set THE standard. Start with focusing on governance, and establish and maintain ethical standards that the board understands and can adhere to, and in turn these should permeate through the organization’s culture. Have the courage to do the right thing cognizant of the ramifications of not doing the right thing.
- Build and maintain the RIGHT board. Boards of the past often operated as a group of individuals coming together to hear updates and make decisions, without engaging in the strategy of the organizations they represented. Today, it’s critical that the Chair builds the board into an effective team with the foresight and willingness to swiftly manage major crises as transparently as possible without negatively affecting day-to-day business execution.
- Inspire each board director to uphold the board’s high standards. You must take corrective actions when a board member is not in alignment with these standards. There is no room for excuses.
- Own and adhere to a clear agenda. It is the Chair’s responsibility to meet and interact with every board member and the CEO (or the Executive Director for a non-profit board) between board meetings to collect input from all board members about the actions that require decisions at the next meeting and the outstanding issues that must be addressed. The CEO needs to be involved in the definition of the agenda, while the Chair should have final sign-off.
- The Board Chair should mentor the CEO. Provide guidance between meetings. Help your CEO be effective in communicating good and disappointing facts. Don’t be complacent with the CEO. Praise the CEO when warranted, and be open about what is not acceptable. Ensure that the CEO doesn’t get divergent information from the various board directors, and that the CEO feels comfortable reaching out to you when clarification is needed or when the CEO needs to stands his own ground for the success of the organization.
- Board Chairs must prioritize ongoing learning and enrichment. Be cognizant that your leadership needs to be inspiring, and that you need to have a pulse on the current issues. You must have specific knowledge about the company or organization’s business, customers, partners and management. You must have specific knowledge about industry threats such as cyber security/fraud, globalization and activist shareholders. Risk oversight is your responsibility with the support of the board.
- Chairs must lead the board to engage in the organization’s strategy with the CEO and the management team. The times are gone for a board to just approve. Do not assume that you and the board are in alignment on the optimal strategy at a given stage of growth or stress for the organization. Ensure that the board and its management are in alignment. Take the initiative with the CEO to commit to a ‘board-management strategic planning retreat’ on a yearly basis that is thoroughly planned with the support of an expert facilitator who is not attached to the outcomes, has no prejudices about the participants and is objective.
- Chairs must be progressive and hold the board, the CEO and the management accountable. Get your board evaluated for effectiveness on a yearly basis. Really. Do you know of any team that doesn’t get assessed for its performance? Delegate with strong and clear intention to your Governance Chair. Make sure that you leverage the skillset of all your directors, and that you gain insights about how to better your own leadership. Get your CEO’s performance evaluated, as well as the management team.
When I conduct board leadership effectiveness evaluations, I am reminded that board directors respect a Chair who is engaged, knows how to create a healthy board culture and supports the CEO in being more effective. I am equally reminded, by management and the CEO, that Chairs can suffocate the effectiveness of the board and of management if they are not clear on the boundaries of their role. While management welcomes exposure to the board and the Chair, the Chair needs to know when management is positioning itself, and the Chair should not use these opportunities to position him/herself with management at the detriment of the CEO’s leadership success. It is important for the Chair and the directors to know the potential of the management team.
Take the time to galvanize your directors before the next board meeting. Be transparent with your directors. Aim to be powerful in how you lead the boardroom, not out of seeking power for yourself, but being a respected Chair.