This means Chairmen should devote the appropriate level of time to their roles, which means visiting operations, talking with staff and customers, as well as investors.
The best Chairmen are able to develop an empathy with the business and engage with its people and issues. What ultimately defines a good Chairman is the ability to run an effective board and to manage relationships with both shareholders and stakeholders.
The appointment of the right Chairman is key for a business wishing to IPO. The Chairman would greatly enhance the prospects of a successful IPO, by building an effective board and calling on their years of experience to ensure the story a company sells to the market is both compelling and real.
The Chair must present the options available to the Board, and clearly state the rationale for any recommendations. However, they must also allow each Board member to express their views, even if they conflict with the view of the Chair. Developing effective communication with Board members as individuals can really help here — knowing their strengths and weaknesses, understanding their perspective and using the most effective influencing style for them.
Confidence and sensitivity are important attributes when leading a professional Board. Being a Chair can be a tough job. As the one person with ultimate responsibility for Board and organisational performance, it is easy to worry, take things personally and become burned out. A good Chair gives strength and support to others while being resilient themselves. This requires a strong personality, which must be tempered with the need to get the most out of other Board members, as discussed above.
The Chair needs to be clear about their vision for the Board, and also to ensure that the Board and senior staff share a clear vision for the organisation. The best Chairs lead the Board in setting the vision and values for the organisation, and ensure this is communicated to staff and other key stakeholders.
Even the most seasoned professional will be tested at times, and a passion for the work will help in maintaining commitment when things get tough. This is arguably the most important attribute of any leader — the ability to read people and build effective relationships with them.
Relationships among Board members can sometimes become strained. An emotionally intelligent Board leader can identify when an element of conflict leads to more effective challenge and more robust decision making, and when it might be detrimental to the Board. A great Chair is an excellent facilitator, who can make everyone feel confident and safe enough to share their views, challenge the views of others, and then reach a joint decision.
The emotionally intelligent Chair hears not just what is said, but can also read the other directors to discover what is not being said. A certain level of intelligence and experience is required to lead Board work, and effectively undertake the key tasks of the Chair role.
Research has shown that Boards benefit from having Chairs who have previously served as both a Chief Executive and a Chair. One concern with this model is it creates a lack of clarity concerning who is in charge. So, his job is not to lead the organization but rather to lead the board. And, leading the board essentially means ensuring that it is fulfilling its designated role and responsibilities.
That said, the split structure does require strong coordination between the Chair and CEO. In this model, the CEO will often take the lead in setting the agenda and preparing advance and in-meeting materials. Beyond preparing agendas and materials, some CEOs even take the lead in facilitating board meetings. Whoever leads the meeting, however, the Chair must take responsibility for ensuring the meeting is well run and should step in if things get off track.
At the highest level, the Chair is responsible for enforcing management accountability and the overall effectiveness of board process. An annual board evaluation is a useful tool to ensure the board is operating effectively for more information on board evaluations, please refer to our book. Typically, corporate by-laws state that the board elects its Chair.
In practice, owners have a strong influence in the choice of Chair by stating their preference for a family vs. Regardless of who fills the Chair seat-an independent director, retired CEO or acting CEO-the Chair must remember the important responsibility of shareholder relations. A good Chairperson gives strength and support to others while being resilient themselves. This requires a strong personality. Even the most experienced and effective Boards can face challenging times and the ability of the Chair to deal with these situations and to bounce back is essential to a Company recovering and moving on.
Through effective communication, the Chairperson gains the confidence of their Board of Directors and provides clarity in the boardroom. They will also stand up to shareholder pressure, if necessary. An effective Chairperson does not lose sight of his main priority of improving the long-term performance of the business. Inadequate leadership and governance contributed to the underperformance and failure of major companies during the economic crisis.
The role of the Chairperson has become even more important.
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