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News & Press: IoDSA in the Press

Leading from the Chair

10 October 2017   (3 Comments)
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By Parmi Natesan and Dr Prieur du Plessis

 

The role of the chair has evolved into one of the most challenging in the corporate world – and possibly the least understood.

 

In days gone by, chairing a board was seen as a way to end a successful career as an executive. However, evolving governance codes like King have placed more and more emphasis on the importance of the chair’s role at the apex of the company.

 

Let’s begin by considering what the job actually entails. Everybody knows what a CEO does, but a chair’s role is less well understood.

 

The IoDSA notes that the primary role of the chair is to provide leadership to the governing body of an organisation and set the tone for its performance.

 

With regard to governing body composition, the chair should help to select new members of the governing body and committees, and ensure they are inducted properly, mentored where necessary, and that ongoing professional development is made available.

 

When it comes to meetings, the chair is both presiding officer and facilitator ̶ a multifaceted role that requires great skill. He or she should ensure members have enough information, are properly prepared and make a contribution. The chair has to keep discussions focused and encourage reluctant members to air their views, and decide when additional interventions and meetings are necessary.

 

Perhaps the most important job of the chair is to facilitate the arrival at sound decisions. As Sir Adrian Cadbury, the founding father of corporate governance, once observed, “The chairman’s job is to see the board reaches not merely a consensus but a good decision” ̶ and that the decision is acted on.

 

Chairs also work closely with the CEO and company secretary to set the annual work plan and the agenda for each meeting, and ensure the company secretary minutes proceedings properly.

 

Chairs additionally have a responsibility to represent the organisation at shareholder meetings and may even be called upon to attend some industry events.

 

They also play a critical role in relation to management, providing the link between the CEO and the governing body. They should build a close but professional relationship with the CEO and the management team, providing counsel and mentoring, especially during times of crisis. The chair will also take the lead in assessing whether the CEO is performing adequately. He or she will furthermore oversee the performance of the company secretary.

 

It should be apparent that the chair’s role is both complex and demanding, and requires an individual who is both strong-minded and tactful, with firm convictions but willing to guide people to conclusions rather than imposing them. Research by INSEAD on what makes a good chairman suggests that the right mindset and enough time to commit to the role are the most important criteria for a good chair, with the most desired personal traits being personal humility, listening while challenging and supporting the board, and the guts to do what is right for the company.

 

The concept of a lead independent director (LI) was introduced in King III as a recommendation only when the chair was not independent. King IV now recommends that an LI member of the governing body should always be appointed. Without undermining the role of the chair, this essentially recognises that the chair’s role warrants a certain degree of support. The LI can act as a sounding board for the chair, and can lead in his or her absence. He or she will also lead the chair’s performance appraisal. The LI can additionally help to amplify the voice of other governing body members, and can help resolve problematic board dynamics.

 

In conclusion, “the chief executive may get the glory and the salary, but leading the board is an increasingly important role, requiring subtlety, maturity and an iron grip on the agenda,” said Andrew Saunders in Management Today. It should be understood that the chair’s role has developed to such an extent, and the mix of attributes is so unusual, that it is now really not appropriate to see it as the last job in a long career. Rather, it is emerging as a new role for a mature governance specialist; just as directorship is becoming a profession, so in time it is likely we will see people working towards a chairmanship as a career goal rather than a part-time appointment.

 

Parmi Natesan and Dr Prieur du Plessis are Executive Director: Centre for Corporate Governance and Chairman of the Institute of Directors (IoDSA) respectively. 
Enquiries: info@iodsa.co.za
Better Directors. Better Boards. Better Business.

Comments...

Mpumelelo Ncwadi says...
Posted 25 November 2017
Great article. in South Africa we have SOEs responsible for managing critical state resources. King IV advocates for the nomination of board members by the nomination committees. But, in the public sector the ministers appoint board members and hand pick the Chairs. When will the PFMA evolve to accommodate King IV?
Shirley Olsen (Butterworth) says...
Posted 30 October 2017
Excellent article. and I agree with Rajes Govender in terms of the SME sector; perhaps it is time to start looking at initiatives for the SME sector and perhaps getting a sponsor in this this for example a bank?
Rajes Govender says...
Posted 24 October 2017
I love this article! Thank you. Great clarity on role of the chairperson. There are so many large privately held businesses in South Africa that do not have independent directors. What is the IOD doing to encourage the on boarding of such directors to these boards so that the CEO who is also the shareholder does what is in the best interest of the entity and not just what is in their own best interests? With the promotion of the growing SME sector and BEE legislation, there are many overnight success stories where companies are growing very fast and going over the R50m turnover level but no investment in governance and mentorship to build the business sustainably. How is the IOD tackling this segment of the market?

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