Start with the name
There was a time when individuals were referred to as Chairman of the Board, and even with the move to modern, gender-neutral titles, some people have been slow to catch up and still use the word ‘Chairman’ to describe the leader of the Board.
Admittedly, ‘Chairman’ reminds us of the ‘male, pale and stale’ boards, with men receiving the most attention in the boardroom. Research in the UK conducted by the Davis reports on the issue of women on FTSE 350 boards indicated a new high of 33 percent of women were Board Chairs in 2020. As a result, it wouldn’t be prudent to address every Board chair as ‘Chairman’. I prefer the title of Board Chair and not chair (which can sound inanimate or lifeless) or Chairperson.
The Board Chair is, by default, the leader of the Board. The Board itself elects this individual to lead, and he or she runs the Board. It is also the board chair, as the leader of the board, who has the most opportunity to influence the dynamics of the board. Undoubtedly, the skills possessed by this individual may be the most important contributing factor as to whether or not a board is effective (Leblanc 2010).
Understand the demands
As the board’s most influential person, the board chair is subject to remarkably high expectations. The Higgs Report of 2003 on the effectiveness underlined the board chair’s role as “custodians of the governance process”. With such fancy elucidations, the idea is that the board chair will be more effective if they can spend sufficient time on the company’s direction and business.
The Financial Reporting Council’s Guidance on Board Effectiveness maintains that the board chair is pivotal in creating the conditions for the overall board and individual director effectiveness, setting clear expectations. For such a demanding role, let us look at the appointment of the Board Chair.
Find experience, knowledge and competence.
The Board Chair is elected by the board and has the same legal duties as a director. These statutory duties are spelt out in sections 177 to 179 of the Ghanaian Companies Act 2019, Act 992. In public companies with stricter rules, the board chair will usually be appointed after a comprehensive professional search by a recruiter or the board’s nomination committee.
What is to be considered in the recruitment criteria for the board chair? A key factor is experience. A board chair’s expertise must be paired with knowledge and a clear interest in the company. Experience is best when it also comes with the necessary competence. Putting an experienced chair in the wrong industry is nothing short of a disaster; we’ve seen this happen several times in the banking and finance industries. Many products in the banking sector are incredibly complex and need someone competent to meet the challenge.
When recruiting, ensure you find a board chair who brings a measure of personal, professional experience, competence, and unique knowledge to the fore.
Aim for effectiveness
Having a board chair with the proper credentials is a good start, but don’t forget to look for other qualities that will make your board successful. Research proves that the most effective board chairs usually display these traits:
- High level of integrity and ethical standards.
- Ability to mentor and advise colleagues.
- Team builders and empathetic.
- Strong relationship building (build relationships within the company, industry and the community at large).
- The intellect and ability to grasp complicated issues.
- Critical thinking and decision-making.
- Challenging yet empathetic toward the executive team.
- Open to debate and discussion in the Boardroom (patience, supportiveness).
- Social capital (respected and known in the industry and community).
Finally, heed the frank statement of Charles Holiday (Chairman of Bank of America), who summarised the role by saying that a high-functioning board chair should know ‘how to get groups to work together, listen, lead an effective meeting, and keep your mouth shut and let others talk. It’s leading teams when they don’t quite have to do what you say.’
Jonathan is a corporate governance consultant who helps Executives, Boards, and Companies with corporate interests in Africa to achieve their business goals by setting them up for success. His core expertise lies in navigating corporate governance challenges and providing compliance, regulatory and business advice to Boards and Companies.
He is the lead consultant for Scribe Advisory, which resolves company compliance issues and deals with statutory red tape for local and international businesses.
Contact
Email: [email protected]
Website: www.yourscribe.co
Contact: +233269355122
