United States: Study: What Makes A Good Board Chair?

Last Updated: April 10 2018
Article by Cydney Posner

In this article from the Harvard Business Review, "How to Be a Good Board Chair," the author, an academic and consultant, discusses good practices for the board chair's role based on a survey of 200 board chairs from 31 countries, 80 interviews with chairs and 60 interviews with board members, shareholders and CEOs. According to the author, international differences notwithstanding, he "found a remarkable degree of agreement about what makes a good chair."

After the scandals at the turn of the century, the author observes, companies increasingly began to separate the roles of CEO and chair to reinforce the function of the board as a check on the CEO, with the result that about half of the S&P 500 now have independent board chairs. Virtually all of these independent chairs have substantial leadership experience, and the "vast majority" are former CEOs—that is, former stars of the show. While that's obviously an enormous benefit, it can also be problematic: "When the chair is not the CEO, there's a real danger that he or she will start acting as an alternative chief executive, sowing conflict and confusion among the firm's top managers."

What then is the key to being an effective chair? According to the study participants, an effective chair "provides leadership not to the company but to the board, enabling it to function as the highest decision-making body in the organization." That's a different job with quite a different skillset, the author maintains. The position of board chair, he contends,

"is not really about traditional leadership at all. To be sure, the board does have an important leadership function: counseling and supervising the management team. But that responsibility is collective, and the chair's job is to enable the board to fulfill it. To be effective, chairs must recognize that they are not commanders but facilitators. Their role is to create the conditions under which the directors can have productive group discussions. Good chairs recognize that they are not first among equals. They are just the people responsible for making everyone on their boards a good director."

Based on the survey results, the author identified the eight principles below for being a good board chair:

Principle #1: Be the Guide on the Side

The job of the chair, instead of the being the star, the author maintains, is to help others to shine. For individuals who are used to crafting their own visions and making them happen, that can be a difficult transition. Often, the skills that made them effective CEOs can be counterproductive as board chairs. According to one chair interviewed,

"After I became chair, the most difficult thing for me was to unlearn my CEO activism....Initially, I would always try to look for the best solution to the problem myself and offer my ideas to the board rather than organizing a group discussion. Later I realized that it puts some directors off and limits opportunities for collective exploration. But I recognized it only after attending a workshop with experienced chairs. And even after that it was very hard to change my style. Working with a coach, I managed to change from doing to helping others to do. Today I derive enormous satisfaction from seeing how the board arrives at a good decision without my saying a word about it."

The author identified three characteristics that study participants found to be necessary:

  • Restraint—"Effective chairs speak little; their interventions are focused on process and people rather than on content and are encouraging."
  • Patience—Encouraging reflection, introspection and thoughtfulness.
  • Availability—Putting in the necessary time for planned and ad hoc meetings and making himself or herself available by phone as needed.

Interestingly, one characteristic that the author found to be unnecessary was industry knowledge: "Few successful chairs in our study considered it important, and the majority felt that it may even be a handicap, since experts often want to find solutions rather than organize a collective decision-making process."

Principle #2: Practice Teaming—Not Team Building

What is "teaming"? It's "gathering experts in a temporary group to solve problems they may be encountering for the first and only time. To enable it, leaders have to shift away from defining team norms and building trust, and focus on quickly scoping, structuring, and sorting the collaborative work." The problem, the author contends, with the typical team-building approach is that directors are not a traditional team. They usually have another full-time job, spend little time together and usually sit on more than one board. As a result, they need a different type of collaboration. Instead of off-sites designed to bring the directors together, a more effective approach may involve individual interactions with the chair, pre-meeting consultations and post-meeting follow-up. Another good practice is to give all directors equal time.

One chair cited in the article "is careful to monitor body language for signs of boredom, irritation, or discontent so that he can intervene quickly. In the event of disagreements, he lets the discussion continue until a consensus emerges. He generally opposes the use of voting to resolve disputes, because he feels that it destroys the collaborative spirit. When the time comes to make a decision, [he] focuses on arriving at a specific, actionable, clearly formulated resolution—and checks that every director understands and supports it." To encourage some directors to contribute more to discussions, instead of "cold-calling them in the boardroom," another chair "solicits their opinions before meetings and presents their views to the board, acknowledging the source, which often triggers a direct contribution."

Principle #3: Own the Prep Work

The author asserts that, beyond boardroom dynamics, good chairs also must put a lot of effort into setting an agenda and putting together a briefing package. Creating the agenda involves seeking appropriate input, identifying items that are "strategic, material, and ripe for decision—and something only the board can handle." Preparation of useful and appealing board materials can often require equal effort.

Principle #4: Take Committees Seriously

The consensus of the study was that most of work of the board is done at the committee level and, as a result, committees are critical to success. One chair indicated that "[c]ommittees are small, their members possess relevant expertise, and discussions are always candid. By definition, board meetings are more formal. So I try to have profound discussions at the committee level—have them do all the analytical work and prepare resolutions for the whole board." That chair also seeks monthly updates on committee work, including their plans, open issues and ideas for the future. He also encourages attendance by scheduling them well in advance and in coordination with board meetings.

Principle #5: Remain Impartial

The author contends that "the harsh reality is that collective productivity suffers when the person at the head of the table has strong views on a particular issue"; instead of being the problem-solver and decision-maker, the chair can improve board discussions by planning the process rather than looking for solutions. One board chair, whose previous decision-oriented participation in board discussions had led to a disaffected board, now "maps out to a minute how much time to devote to the CEO's report and how much to the following discussion, and how to structure the latter—down to who will get the floor first and who will speak last." Another chair, describing a similar evolution, offered this "insight into board-chair dynamics: 'If I want to see the whole picture and facilitate the work of the group, I should not play. I should become an onlooker without any stake in the game.'" Although, initially, it was tough sledding, she eventually unlearned her old habits. Now, instead of looking for solutions to problems, she looks for the best way to organize a discussion of the problems, focusing "on how to structure conversations and allocate time for presentations, committee reports, and discussions, and which directors should open or close discussions." Over time, her skills became even more refined:

"During the meetings, [the chair] concentrates on listening to what each director says, observing how that person says it and the group's emotions. At first she allowed herself only to frame a discussion, rephrase what other directors had said, synthesize solutions from their opinions, and articulate a proposed resolution. Over time she learned when to extend a discussion, when to shorten it, when to let the conversation flow freely, when to ask everyone to express opinions in one minute, and when to solicit detailed views from particular directors. Her meetings became more dynamic, less noisy, more fun, and altogether more productive. To reinforce her new style [the chair] organized mini-evaluations at the end of each board meeting, asking directors to recall instances when she acted as an expert rather than as a process facilitator. But eventually she learned to put her 'expert hat' on when required—though not at the expense of the quality of the process. As she puts it: 'If I do it well, the board does not notice it was the chair's idea.'"

Principle #6: Measure the Inputs, Not the Outputs

Applying quantitative metrics to evaluate board performance is wrong-headed, the author contends. That's because board decisions typically have a long-term impact that cannot be measured with a set of year-end metrics. The best way to assess the effectiveness of the board, study participants reported, is to assess the quality of the inputs: "if the inputs are good, the desired outputs will—in general—follow. For [one board chair], five inputs are critical: people, board agendas, board materials, board processes, and board minutes. He sees it as his job to ensure that they are first-rate." This board chair assess these inputs through board self-evaluations and outside consultants' reviews.

Principle #7: Don't Be the Boss

Good chairs do not see themselves as the CEO's boss, the author observes, or encroach on the CEO's territory. Instead, they work to build a "board-CEO relationship," keeping in mind that they represent the board: they "understand that the board is the collective 'boss' of the CEO and that the task of the chair is to make sure the board provides the goals, resources, rules, and accountability the CEO needs." Along with that, the chair may ensure that the board provides the CEO with "what a good boss gives his subordinates: motivation, control, advice, and mentoring."

Principle #8: Be a Representative with Shareholders, Not a Player

Here, the author observes that if "a CEO's boss is the board, the board's boss is the shareholders. The relationship with them is a key concern for the chair, who tends to be their primary interface with the company." In that regard, the chair often acts as the board's agent and as an interface between the board and the shareholders, speaking with the voice of the board, not his or her own. The chair also advises the board about shareholders' expectations and plans.

Speaking of metrics, below is an interesting table of benchmarks provided by the author to measure the effectiveness of the chair:

  Effective Not so effective
Length of meetings 4 to 5 hours 1 to 2 or 6 to 8 hours
Items on the agenda 5 to 8 8 to 12
Chair's airtime during meetings 5% to 10% 20% to 30%
Management presentations Up to 15% of board time Up to 70% of board time
Total time spent as chair per year 25 days 40 days

There's lots more in the article, which is definitely worth a read!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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