Being chairman of the board is an honour. But it’s also an important job that can make all the difference in terms of the board’s overall effectiveness. Three things distinguish truly great board chairs—and relatively few actually step up to these challenges. Ready to raise your boardroom game as chairman? Here are the steps you need to take:
1. Step up to director performance issues. PwC’s 2013 Annual Corporate Directors Survey of over 900 public company directors found that 35% felt someone on their board should be replaced. 35%!! That’s a pretty big number. When the PwC survey went on to ask, “What are the impediments to replacing an underperforming director?” the No. 1 answer was, “Board leadership is uncomfortable addressing the issue.”
If you’re the chair of the board and you’ve got someone on your board that really isn’t making the type of contribution they should, you need to address the problem rather than ignore it. Retirement ages and term limits are the easy way out—and often they extend rather than resolve the situation. Real boardroom leaders understand the importance of stepping up to these awkward issues and have the courage to do so.
A good example is a chairman that I worked with in the northeastern U.S.—a female chair who was also the CEO of a major company. She incorporated robust individual director assessments into her board evaluation every three years and then, most importantly, took action on them. She explained that she was frustrated by her own chair’s failure to address director performance issues at the company where she served as CEO; she wasn’t going to behave the same way in her chairman’s role. Three years later, when the individual director assessments came around again, she expected recriminations. Instead, it was evident that the board’s respect for her had grown tremendously. In fact, she had raving fans.
2. Step in to stop micro-management. A board’s tendency to “get down in the weeds” rather than stay at a governance level is the bane of many board meetings for CEOs. Yet the solution to this problem should be sitting at the head of the board table—it’s the chairman who steps in and reminds the board, “I think we’re overstepping into management’s turf at this point.” It’s this type of ongoing board leadership that actually solves micro-management problems. But for this to work, the chair needs to have a solid understanding of the management/governance line in the first place.
I was recently working with a U.S. bank that had this problem. Its frustrated CEO had brought in a lawyer noted for his expertise in governance to speak about this topic at a board dinner. When that had little impact, he created a handout with two columns: Governance on one side, Management on the other. But again, the problem persisted. I asked him, “Shouldn’t your chair be playing a role in addressing this issue?” To this, he replied: “Our chair? He’s the worst offender!”
3. Step away from the temptation of driving an agenda. Great board chairs are great listeners. They also realize that if they’ve earned the board’s respect, what they have to say carries a lot of weight. Because of this, they hesitate to weigh in too early on critical issues so as to foster a robust debate.
A classic example is a chairman from Chicago who I had the privilege of working with on a CEO succession plan. He had me interview all of his board members on this issue but said, “Leave me out for now. I want to see what they have to say.” We discovered that the board was sharply divided on two issues: First, whether an external search was even necessary, and second, if it was, whether it should be limited to candidates from the company’s industry or broadened into related sectors.
We discussed these issues at a board dinner—and a spirited debate ensued. Finally the chairman weighed in: “I’m persuaded. We need to look outside but we need to limit it to our sector. Now, if you had asked me about this at the outset, I’d have said that we don’t need to waste our time with an outside search given the calibre of our bullpen. And if I’d said that, you probably would have all gone along with me. But I wanted to hear your views on this issue and it’s changed my mind.” To which one of the board members called out, “And that’s what makes you a great chairman!”
Beverly Behan is a New York-based board consultant who has worked with more than 100 boards of directors in the U.S., Canada and internationally in the past 17 years. E-mail: firstname.lastname@example.org.