New challenges in the Chair

Friday, 12 February 2016


    Less considered are the characteristics of board Chairs, their changing role, and their biggest challenges as they help lift organisation performance through good governance.

    Chair Survey 2015

    INSEAD Corporate Governance Initiative & Ward Howell, January 2016

    Much has been written about the characteristics of high-performing boards and directors. Less considered are the characteristics of board Chairs, their changing role, and their biggest challenges as they help lift organisation performance through good governance.

    A recent study by the INSEAD Corporate Governance Initiative surveyed 118 Chairs from medium and large companies in 30 countries. It sought to understand motivations to take on the Chair’s role, what Chairs do inside and outside the boardroom, their challenges and how they overcome them, and their contribution to performance.

    The French-based business school has made an important contribution through the study. Relatively less is known about the intricacies of the Chair’s role compared to CEOs because much of their work is done behind closed doors and they often deal with sensitive matters.

    The INSEAD Chair Survey 2015 found the typical Chair is a 55-year-old man with a Master’s degree who held the role of CEO, vice-president or independent director before chairing the board. On average, they sit on three boards and chair one of them.

    Professional interests, not financial gain or the role’s prestige, is the main motivation for Chairs, the study found. The elevation to Chair was regarded as a professional development and learning opportunity and a chance to use more of their skills. This further confirms the specialisation of the chair role and its career opportunities.

    Chairs indicated four main challenges. The biggest was developing and maintaining relationships with a controlling/large shareholder. Building constructive, sustainable relationships with key shareholders was an increasingly larger part of the role.

    The second challenge was managing difficult board members. Chairs commented on the challenge of managing directors who are disinclined to co-operate with the rest of the group or try to influence the board too much with their personal views and interests.

    The third challenge was the level of teamwork among board members. The survey noted: “Many [directors] are or have been CEOs or successful executives and have a habit of ruling rather than collaborating. Making them listen, not speak, making them supportive of each other and of management rather than challenging both, and making them question their own position rather that of a colleague, is a serious challenge for any chair.”

    The final challenge was information asymmetry with the CEO and other executives. Chairs reported the information challenge of relying on executive teams to provide them with data and reports, and ensuring the board has adequate information to make decisions.

    Overall, the survey suggests the Chair’s role is becoming increasingly specialised and that Chairs are highly engaged in their organisation, strategic, agile and wanting to learn. The view that Chairs are a “font of wisdom”, called on occasionally by the CEO, is increasingly old-fashioned.

    Today’s Chair recognises the role of governance in driving performance, and their role in maximising board performance to achieve that goal.

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