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Great Boards Don't Exist Without Great Chairs:
Elizabeth Watson QC
CEO and Founder, WATSON Advisors Inc.
Heather Kelsall
Associate at WATSON Inc.
Introduction
In governance circles it has long been recognized that the board chair plays a key role in overall board performance. The chair role touches all aspects of the board and its work—it is challenging and takes time, practice, and reflection to truly master. This chapter unpacks this critical role and the implications of key shifts in the chair role. It explores what the role entails and what it takes to be a great chair in today's boardroom.
The chair sets the tone at the top for the board and, in concert with the CEO, for the organization. The chair orchestrates the board's work, elevates individual and board-wide performance, and manages boardroom dynamics. While in the past the chair's role might have been seen primarily as managing meetings and liaising with the CEO, today there is a growing appreciation of the breadth and complexity of the role, including such activities as planning the forward agenda, ensuring the right information is before the board, framing key issues for board decision or oversight, orchestrating the strategic planning process, nurturing relationships with stakeholders, and fostering a healthy board culture.
Along with this evolution in how the chair contributes to the board's work comes a shift in the skills and attributes required for success in the role. Traditionally, chairs were chosen for their industry expertise, gravitas or general reputation. Increasingly, however, they are being selected based on a consideration of emotional intelligence, credibility and influence in the boardroom, and exceptional communication skills. Chairs are becoming more attuned to the softer side of governance: heightening their focus on team building, managing interpersonal dynamics, and using facilitation techniques to promote meaningful dialogue.
Chairs are also reacting to increased business complexity, regulation, and demands for board accountability by elevating the strategic focus of the board. Chairs are more deliberate in ensuring the board is appropriately engaged in key business issues such as strategy, risk management, leadership performance, succession, and organizational culture. They are also responding to the rising influence of shareholders by playing a more active role in shareholder engagement, paying careful attention to ethics in the boardroom, and focusing on board performance and renewal.
Unpacking the Modern Chair's Role
The role of the modern board chair is complex and varied. At a high level, it spans four major areas: board meetings, board dynamics, stewardship, and partnership with the CEO. Each of these areas is discussed below. (See Figure 6.1.)
Meetings
Directors make decisions or give direction by acting collectively. While boards meet from time to time for planning sessions or special meetings, the most common place for decision-making is at the board's regularly scheduled meetings.
FIGURE 6.1 Board Meetings, Board Dynamics, Board Stewardship, and Partnership with the CEO
Meetings should not be viewed in isolation. One of the chair's key tasks is to bring a long-term lens to the board's work, considering how and when the board will deal with all of its responsibilities during the course of the year. It is useful for the chair to convene a meeting with committee chairs at a regular time each year (e.g., after the annual general meeting) to design the board's work for the upcoming year. In addition to regular topics and governance responsibilities, the chair should discuss key initiatives and how they will be managed through the committee and board process. The resulting forward calendar provides a framework for all board leaders and helps bring an intentional approach to the board's work.
Great meetings don't happen by chance. They are a result of significant planning, thought, and preparation, on a meeting-by-meeting basis, coupled with a long-term view, aligning the board's work with key governance responsibilities, strategic issues, and material decisions. The chair plays a key role in setting up conversations, pre-testing contentious issues with directors, and looking ahead to tee up critical conversations.
Board meetings require a clear purpose, the right level and depth of information, an intentionally designed agenda, and well-prepared directors. The chair's role is not simply to facilitate the meeting, but to set the stage for a productive and focused conversation. This part of the chair role is often overlooked and undervalued. However, the chair can only have true impact in the room if the board is focused on the work it should be doing and has the right information to support its work.
The chair partners with the CEO and corporate secretary to guide:
- Which topics come onto the agenda (and which don't)
- What information is required in advance and how it is packaged
- How much time is given to each topic
- How directors are engaged in the conversation
One area that creates great consternation in boardrooms is the nature of pre-reading material provided in advance of board meetings. The most common complaint is that information is too detailed and entails a large compilation of data rather than key data, trends, and analysis. For recurring items, most boards prefer a dashboard that highlights agreed-upon performance measures and areas of concern. For significant items requiring decision, directors appreciate management's analysis that allows them to consider the issue in context, including the impact on strategy, risk, and human resources, financial and operational consequences, stakeholder views, legal considerations, and compliance with organizational policies and values. Effective chairs discuss the upcoming agenda with the CEO and corporate secretary and provide feedback on the type and quality of information that will be provided to the board as pre-reading.
During meetings, the chair plays many important roles. The chair seeks to promote a culture of openness and debate by facilitating a respectful and constructive conversation where all voices are heard and different perspectives are considered. The chair strives to reach decisions through consensus where possible, moving conversations along in an efficient manner while creating the space to explore important strategic issues, consider financial, human, and risk-related implications, and reflect on underlying assumptions, alternative ideas, and options. Some chairs purposefully shepherd the board from a place of understanding to agreement, following the anatomy of a conversation depicted in Figure 6.2.
Facilitating in camera sessions is another important aspect of the chair's role in board meetings. The chair's role is to encourage open discussion of topics directors wish to discuss (raised at the in camera before the board meeting) or have already discussed (raised at the in camera after the board meeting). A great chair knows how to manage the parameters of an in camera meeting, allowing directors to explore issues of concern without delving into areas that legitimately require management's insight and advice.
FIGURE 6.2 Anatomy of a Conversation
In order to make the best use of meeting time, chairs should consider the following:
- Schedule time for substantive issues early in the meeting while directors are fresh.
- Frame the issue for discussion to help directors focus at a strategic level.
- Ensure management provides briefing notes for all major topics.
- Ensure items coming from committees that require discussion by the full board are listed on the board's agenda with adequate time.
- Require committee reports to provide a concise summary of the committee discussion, decisions, and recommendations, highlighting issues of strategic importance.
- Clarify the board's decision or direction to management.
- Ensure there is enough time for the in camera session at the end of the meeting, before directors run off to their next engagement.
After each meeting, the chair, with the support of the corporate secretary, ensures board decisions and actions are clear to management and documented, communicated, and implemented in a timely manner. The chair should follow up with the CEO to provide feedback, share key messages from in camera sessions, and provide support and advice while also respecting the CEO's responsibilities for executive matters.
Dynamics
Board dynamics are key to how the board operates—how it discusses issues, makes decisions, and handles dissenting views. Boards with healthy dynamics work together to reach informed decisions in the best interests of the organization. They work as an effective team to set strategy, manage risk, and oversee the CEO. The chair plays a crucial role in shaping and maintaining a healthy board culture and positive dynamics.
Stewardship
The chair's role spans far beyond the boardroom. In order to properly manage the board's work, the chair must play a leading or coordinating role in all aspects of the board's stewardship responsibilities, including creating a high-performing board (board stewardship), overseeing key elements of the organization (organizational stewardship), and engaging in important relationships that are important to the board's work (relationship stewardship). The chair participates in these stewardship roles in several ways.
Board Stewardship
Good boards rarely just happen. The best boards are created by bringing together a group of committed individuals with:
- Knowledge, interest, skills, and experience relevant to the needs of the company
- Personal attributes that support the right culture and a high level of team functioning
- Leadership skills
- Diverse perspectives to ensure sound consideration and decision-making
While board recruitment, development, and succession planning are typically the purview of the governance and nominating committee, a good chair takes a keen interest in these processes to ensure they are given the time, attention, and support they deserve. As leader of the board, the chair should play a key role in all aspects. Figure 6.3 sets out the chair's role in each of the key steps in building and sustaining an effective board.
FIGURE 6.3 Chair's Role in Building and Sustaining an Effective Board
Organizational Stewardship
In order to supervise the management of the business and affairs of the organization, as part of discharging their duty of care, boards choose where and how to focus their efforts on key elements of organizational stewardship. Typical board responsibilities in this area include:
- Planning for and selecting the CEO
- Setting the organization's purpose, direction, and strategy
- Determining the nature and extent of risk the organization is willing to tolerate in the implementation of its strategy and overseeing risk management
- Ensuring the organization has sufficient resources to execute the strategic plan
- Ensuring a performance culture that is ethical and drives value creation
- Designing the executive compensation framework and compensating the CEO
- Approving major policies
- Ensuring integrity of published financial statements
- Approving major acquisitions and divestitures
- Protecting company assets and reputation
- Monitoring progress against strategic, business, and financial goals
- Ensuring the organization is compliant with all legal requirements and accountable to its regulators, shareholders, and other key stakeholders
A key part of the chair's role is to ensure the board carries out its organizational stewardship responsibilities in the best way possible, and in keeping with good practice. Some areas, such as legal compliance or financial oversight, may be dealt with by a regular process that is developed and defined with management. The board's approach in other areas, such at the board's role in strategy, CEO succession, and risk management may follow an annual pattern but require more time or deep dives on specific issues at different times. The chair must stay alert to the board's responsibilities and the company's ongoing context to ensure the board is appropriately engaged on the right things at the right level, depending on the circumstances.
Committees increasingly play a significant role in organizational stewardship matters, taking a more comprehensive view of particular issues on behalf of the board. The chair's role is to coordinate the committee's work with the board's work and responsibilities. Committees exist to serve the board and their agendas should be informed by the board's requirements. Some chairs sit in on all committee meetings, to understand the issues being discussed and to provide coordination between the board and its committees. If the chair sits in on committee meetings, the chair must be careful not to dominate the meeting or discussion. If the chair does not sit in on committee meetings, the chair will need to communicate with the committee chair to keep abreast of issues and facilitate coordination with board meetings.
In order to facilitate the board's work in organizational stewardship, the chair needs to stay informed about all key aspects of the organization and work closely with the CEO and committee chairs to design the board's level of involvement. A good chair will frequently consider:
- What substantive issues require the board's attention?
- What is the board's role with respect to this issue at this time?
- How can the board be the most effective in carrying out its responsibilities?
Relationship Stewardship
Governance involves people and relationships. In addition to cultivating relationships with fellow directors, the chair plays a critical role in developing and maintaining strong relationships with management, stakeholders, and shareholders.
A great chair keeps shareholders' and stakeholders' interests in mind and makes sure they are considered appropriately by the board as required. In addition, the chair understands how to interact appropriately with shareholders and stakeholders and how best to nurture relationships to promote the success of the organization. The chair ensures effective and proactive communication with shareholders and stakeholders on behalf of the board by:
- Engaging with shareholders and stakeholders on behalf of the board (including government, regulators, industry partners, investors, and donors) and on behalf of the organization in concert with the CEO
- Speaking on behalf of the board and representing the board externally at events and in the media
- Designing and chairing the AGM
The Chair-CEO Relationship
No governance relationship is more important than the relationship between the chair and CEO. The chair-CEO partnership is a unique relationship that requires deep trust, openness, and collaboration, balanced with a degree of independence and objectivity. The chair and CEO bridge governance and management and help to maintain the right balance through this crucial relationship.
The chair-CEO relationship doesn't always come naturally. It requires work, compromise, clarity, and open communication. Transparency and accessibility are key. A strong chair-CEO relationship demands shared ownership of the relationship by both parties and a commitment to the importance of an effective partnership. It also requires alignment of purpose and shared ownership of organizational success.
The relationship also needs professional boundaries—neither party can perform their role optimally if they are too close. A professional chair-CEO relationship is characterized by trust and collaboration balanced with objectivity and respect for the separate roles and responsibilities.
The relationship between the chair and CEO has the power to make or break board and management dynamics and significantly impact organizational performance and culture. After a new chair or CEO comes into the role, a key element of the onboarding process is a meeting between the chair and CEO to talk about respective roles, responsibilities, leadership styles, and mutual expectations. A common vision of organizational success and the board's role in governance, together with a clear framework on how the chair and CEO will work together, will go a long way to create a strong working relationship.
In addition to working with the CEO as part of managing the board's work, the chair plays a special role in relation to the CEO position itself. When a search is underway, the chair usually chairs the search committee and plays a key role in recruiting the CEO. Key considerations for a CEO candidate are the quality of the chair and the nature of the expected relationship with the chair. The chair also plays a key role in CEO performance management, helping the CEO clarify goals to bring forward to the board for consideration, playing a lead role in the CEO evaluation process and delivering the board's feedback on performance. The chair must ensure the board considers CEO succession on a regular basis and must provide leadership if and when it is time for the CEO to transition out of the role. The chair must support the CEO to be successful while at all times being ready, willing, and able to make a change when necessary (see the sidebar on CEO success).
Finding and Developing Great Chairs
A great chair knows how to elevate the board by maximizing director contributions inside and outside the boardroom. Being a great chair requires a combination of character, commitment, and competencies. A chair of character sets the right tone at the top through ethical conduct, even-handedness, collaboration, and strategic perspective. The chair must be committed to the organization, to the role, and to the significant volume of work it demands. And of course, the chair must have the right skills and competencies to be successful in the role (see the sidebar on character, commitment, and competencies).
Given the importance of the chair role, appropriate time and effort should be spent on developing chair candidates, selecting the right chair, and supporting the chair's success. The table below maps the lifecycle of the chair, from ongoing succession planning to chair development and evaluation.
Chair Succession, Recruitment, Orientation/Development, and Evaluation
Chair Succession
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Board chair succession is not a one-time event and doesn't begin once a chair's end of term approaches. The best approach is a long-term process that:
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| Chair Recruitment
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Not all great directors make great chairs. When the time comes to choose a new chair, it is important to have an objective, skills-based process that defines the role and seeks candidates who have the character, competency, and commitment required for success. Planning for board chair turnover should involve a consideration of the future role requirements, potential candidates, and an open and transparent process to evaluate candidates and select the new chair. |
| Chair Orientation/Development
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By the time a director becomes chair, they typically know the organization, understand how the board works, and have a good grasp of the technical aspects of governance. They know the governance framework, processes, and practices and understand the key issues and opportunities on the horizon. Chair orientation builds on this foundation with a heightened focus on board culture and dynamics and relationships within and outside the organization. Surprisingly little in the way of a practical guide is written for the chair role, given its importance to board effectiveness. Incoming chairs often find themselves in the role without proper training and short of practical tools and resources. While formal training is valuable, the best learning for a chair comes through doing, as they learn how to prepare for and lead meetings and gain a new perspective of the individuals and dynamics, on and off the board. As part of the chair lifecycle, boards should ensure support is in place for chair mentorship and development. |
| Chair Evaluation
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The chair role is challenging and complex. Chairs need feedback to understand what they are doing well and what they could do differently to best serve the board and the organization. Boards are becoming more intentional about providing the chair with meaningful and focused feedback by incorporating a more detailed chair evaluation as part of a board or director evaluation process and holding a session without the chair present to discuss findings and key messages. To complement this practice, great chairs seek ongoing feedback from directors and the CEO, through in camera sessions and one-on-one interactions. |
Role of the Corporate Secretary
With today's heightened expectations of the chair role, chairs should ensure they have adequate support. A good corporate secretary works in concert with the chair to help the chair execute key responsibilities and manage the board's work. Under the chair's overarching direction, a good corporate secretary (or chief governance officer as they are often called today) can:
- Develop and manage key governance processes.
- Provide advice and support on governance related issues.
- Manage and coordinate board and committee agendas.
- Serve as a day-to-day communication link between the board and management.
- Advise the board on emerging governance and risk management matters that affect the organization.
- Act as a confidential sounding board to the chair on issues of concern.
A chief governance officer also helps to bridge the gap between governance, strategy, and operations by coaching senior management on developing board materials and presenting to the board.
Conclusion
A great chair is the cornerstone of an effective board. The role of a modern board chair is complex and demanding—from driving strong group dynamics and culture to designing and facilitating meetings, partnering with the CEO, and advancing all areas of board, organizational, and relationship stewardship. As more and more is expected from boards today, the role of the chair must continue to be in sharp focus. Boards should engage in a thoughtful process to choose a chair with the right character, commitment, and competencies to take on this highly important role.
About the Authors
Elizabeth Watson, QC (Liz), is the founder and leader of WATSON, Canada's largest multidisciplinary governance firm. WATSON's raison d'être is to strengthen Canadian organizations by building highly effective boards and executive teams. Liz has practiced law for more than 35 years and has spent over half her career advising boards, chairs, directors, committees, and CEOs.
Liz works closely with the corporate governance community in Canada and is a sought-after advisor, speaker, and contributor on governance, CEO and board recruitment issues, and the importance of diversity on boards. She teaches at the ICD's Directors Education Program on Governance Effectiveness and recently authored CPA Canada's publication on Building and Sustaining an Effective Board.
Liz has been named as one of Canada's Top 100 Most Powerful Women and as one of the inaugural Top 100 Influential Women of British Columbia.
Liz served for four years on the ICD Fellowship Awards Selection Committee, and she currently serves on the selection committee for the Canadian Excellence in Governance Awards. As a director, Liz serves on the board of Peterson and SHAD Canada. She previously served on the boards of the Institute of Corporate Directors, Choice School for Gifted Children, Forum for Women Entrepreneurs, Women in the Lead Inc., the BC Cancer Foundation, and as an Advisory Board member for Canada's Top 40 Under 40.
Liz holds an LLB from the University of British Columbia and completed executive education in the areas of governance and finance at Harvard University and Ivey Business School respectively. She was named Queen's Counsel in 2012.
Heather Kelsall is a governance associate at WATSON, Canada's largest multidisciplinary governance firm. Heather supports boards across sectors with comprehensive governance reviews, governance practice, and process design, and board, CEO, and director evaluations. She leads projects throughout all stages of the client lifecycle, from survey and interview design to interviewing, recommendation development, and report writing. Heather has worked with clients across Canada to review, refine, and design value-adding governance structures to support organizational success.
Heather also designs board and committee debriefs and education sessions for WATSON's Governance Academy and plays a key role in WATSON's course development and thought leadership.
Heather holds a Master of Science in global governance and ethics from University College London and a Bachelor of Arts in political science from the University of British Columbia.
Heather currently serves on the Fresh Roots Board of Directors and is vice chair of Quality Assurance Committee Standing Panel C for the British Columbia College of Nursing Professionals.