Should a company chair simply preside over board meetings or have a direct impact on the day-to-day running of a firm? And what are the skills required? The IoD’s Information and Advisory Service (IAS) explains…
In the eyes of many, the company chair is merely a symbolic ‘big cheese’ in the boardroom, with the chief executive running the show – and duly taking the credit or blame for success or failure respectively – on a day-to-day basis. In reality, though, the skills required to ensure the board is effective in guiding business strategy are more precious and elusive than one might think. It’s an arsenal of traits that often takes time to accumulate – hence many chairs being above the age of 50 (although you do find the odd tricenarian who’s an old hand at acquisitions, mergers and takeovers, they tend to be few and far between).
The specific role of a company chair has been defined by modifications to UK corporate governance codes, notably those produced in 1992 by the Cadbury committee as a response to a spate of corporate scandals. As well as recommending that each board should have at least three independent non-executive directors, Cadbury suggested that a chief executive and a separate chair should share boardroom power equally, as opposed to the two roles being combined in one.
Generally speaking, in the UK a chair is appointed by the board, and may be full or part time, or even combine the role with that of managing director or chief executive in SMEs – though, as per Cadbury, joint roles are not recommended for listed companies. But, in light of a slew of corporate governance reforms in recent decades, what precisely is the current role of the company chair?
Inside the boardroom
Chairing board meetings is a multi-faceted role. A chair, having determined the agenda and its order, must also ensure attendees receive accurate, timely and clear information in advance in order to contribute effectively. Having composed the agenda the chair then becomes conductor, keeping track of individual directors’ contributions, ensuring that all become involved in debate and decisions, making sure an appropriate amount of time is spent discussing each item. Finally, and crucially, a chair should also steer discussions towards a consensus, offering concise summaries so that all present understand what has been agreed.
Outside the boardroom
A chair is a company’s leading messenger of aims and policies to the outside world, and a key arbiter when it comes to communication with shareholders and stakeholders. Their duty is also to oversee the induction and development of directors and to support the chief executive and managing director.
What character traits are required?
Being a sympathetic listener who understands the dynamics that can often emerge between large groups of powerful, strong-willed people helps a chair to ‘conduct’ a board meeting effectively. A cordial, but not intimate, relationship with the chief executive is also desirable. Some observers believe that former senior executives don’t make the best chairs, as the impetus to be the most powerful person in the room can be too great. That said, wallflowers definitely need not apply – an assertive individual who knows when, and when not, to wield their axe will be the most effective in keeping a company well governed and in rude health.
The IoD’s Role of the Chair course will next take place in November. For more information click here
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