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The Diligent team
GRC trends and insights

Choosing the right board chair for your board

February 12, 2020
0 min read
Image of a boardroom signifying choosing the right chair for your board.

Some of the basic principles of leadership never really change. However, in some very important ways, the characteristics and responsibilities for corporate leadership, including the board chair position, must adapt and adjust with the times.

Companies are operating in a time of more rapid change than ever before. Where much is expected, much is required. What that means is that some of the criteria for an effective board chair will vary depending on changes in the marketplace and the needs of the company.

The board chair plays an essential, central role in the boardroom, especially with regard to shaping relationships. In fact, the board chair is the linchpin on many key issues. The board chair must establish a strong working relationship with the CEO and work to improve the flow of information between them. In addition, the board chair plays a role in developing the board's culture and dynamics.

The role extends to improving various stakeholder relationships, especially as it pertains to shareholder engagement. When considering the preferred characteristics for board chair, they won't necessarily fit nicely into a box.

What a company needs in a board chair will vary based on the maturity of the board's composition and the risks and opportunities facing the board.

To a large degree, whether best practices for good governance are effective depends on having a strong and effective board chair. More importantly, an effective board chair gives the board a competitive advantage.

Consider the Necessary Responsibilities for a Modern Board Chair

Beyond the basic board chair duties like preparing agendas for board meetings and facilitating meetings, a modern board chair sets goals for the board's performance and monitors those goals in light of evolving business strategies.

It's essential for today's board chairs to stay connected on material new initiatives and to strengthen alignment on how the board and committees engage regarding critical and fast-changing issues.

Among other things, board chairs need to be well-versed on such issues as strategy, risk, disruption, talent, corporate culture, incentives and technology.

In modern boardrooms, the board chair leads the charge on setting shared values and expectations for a well-functioning board. The chair should continually be evaluating what is ' and isn't ' working for the board.

Annually, the board chair takes the lead on conducting the annual board evaluations, which may include the board, committees, individual board directors or some combination of them. It's expected for modern board directors to initiate one-to-one discussions with the CEO and other board directors on key topics and to be instrumental in ensuring that discussions are open and group dynamics are constructive.

Qualities and Characteristics of an Effective Board Chair

To begin with, board chairs nearly always have extensive tenure on the boards on which they serve. This is important because they also bring strong institutional memory to the board with them. Here's a list of other qualities that boards should look for in considering the perfect candidate for the position of the modern board chair:

  • Has experience in business leadership roles.
  • Has a proven track record in developing and executing strategy.
  • Demonstrates a forward-thinking mentality.
  • Is adept at facilitating change through persuasion and influence with individual board directors and with the entire board.
  • Is knowledgeable and able to work with the board to identify and execute on self-improvement opportunities as they relate to structures, processes and behavior.
  • Possesses the fortitude and vigilance to make sure that changes in board processes and practices change the board's behavior over time.
  • Expresses an awareness of the board's new needs as they evolve and is willing to adjust board practices, processes, agenda-setting and structures accordingly.
  • Possesses superb communications skills, is skilled at pursuing difficult conversations, and is sensitive to the CEO and fellow board directors in communicating with them.
  • Has a natural aptitude for relationship-building as it pertains to the board, management, shareholder, stakeholders and regulators.
  • Factors in the necessary scope of inclusiveness related to diversity and can encourage collaborative discussions, unconventional thinking and collegiality, while discouraging the tendency for the group to fall prey to groupthink.
  • Is humble and a good listener who is good at understanding various perspectives, the last among equals

It goes without saying that boards should also consider any other unique needs that their board has in recruiting the best-qualified individual to serve as board chair.

Current Areas of Most Prevalent Experience for the Board Chair

The National Association of Corporate Directors (NACD) identified the percentages of the current areas of the most prevalent experience for the position of today's board chair position in its whitepaper entitled 'Fit for the Future'. The commission identified the following experience profiles of current directors along with the percentage of companies whose independent board directors have experience in these areas.

  • Leadership 82%-84%
  • Finance 62%-66%
  • Management-Strategic Vision 60%-61%
  • Investment Experience 36%-37%
  • Technology 30%-34%
  • Global Experience 23%-24%

Notable Characteristics to Consider for Recruiting Your Next Board Chair

The process for considering an individual for board chair begins with assessing the qualities and characteristics of your board directors. One of the considerations in choosing every board director should be that they're capable of leading the board at some point in the future. Nominating committees should recruit with this mind.

A board director may be selected for a constellation of skills. Upon building those skills, board directors may be called upon to serve as committee chair, task force leader, or eventually, the board chair.

The NACD and Diligent Corporation's Nom Gov tool, with its database of thousands of profiles of board director candidates and executives, is a good resource for widening the net in identifying the qualifications for your next board chair.

A Modern Board Chair Is Capable of Taking the Company into the Future

Today's boards of directors need a strong, effective board chair who's capable of confidently taking the company into the future with all its uncertainties.

In choosing a capable, modern board chair, the best approach for nominating committees is to reassess the approach they use to develop and select the right board leader candidate.

The process must be fair and transparent. Boards should avoid the temptation to rely solely on seniority or the recommendation of the outgoing board chair in making their final decision. Fellow board directors and CEOs will likely have good input on what makes for an effective board chair.

In most cases, the nominating committee will bring forth candidates after evaluating their strengths and weaknesses. Some boards make it a practice to hold a formal vote in the executive committee of their choice of board chair.

Today's boards should make it a practice to periodically define the characteristics and role requirements for the next leader of the board. This is an important step that will help to prepare and prime candidates to serve as a board leader.

Overall, it takes updating your current practices, identifying modern board chair characteristics and using modern governance tools to have the best success in choosing your next board chair.


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