white paper

What a company needs from a Board Chair has completely changed over the past two decades. Unfortunately, many Chairs have failed to get the memo. 

There is a cultural revolution going on in the world of business. Only a few years ago, good governance simply meant that a company was run for the benefit of its shareholders. If your owners and investors were happy, then the company was on the right track.

Today, you can’t have good governance without considering the needs of a whole range of stakeholders and issues, including clients, employees, technology, regulation, politics, the environment and changing consumer behaviour and values.

We’re living in a world where people expect more from businesses than merely fulfilling their mandate to make money in return for providing goods and services. Companies are expected to be a part of society and take responsibility for their behaviour.

Corporations often deserve the bad rap they get – when it’s not part of your remit to consider the impact on society of your actions, it can become a low priority in a boardroom that is laser-focused on shareholder value.

And yet, people who run businesses are regular people like everyone else. Despite the bad players who greenwash their activities and only pay lip service to enlightened values, most people who manage companies want to make a living in a way that benefits society.

The person whose responsibility it is to oversee the company’s activities and make sure this happens is the Chair.

Separation of powers

In the UK, most enterprises have a Chair who is separate from the CEO and senior executives. This is often not the case in other countries, including the USA, where it is common to have a CEO who is also executive Chair.

For most CEOs, running the company and implementing the strategic vision is a 24/7 job. They are intimately involved in day-to-day activities and at times of intense activity can find it difficult to stand back and see the wider picture.

The Chair has the advantage of being one step removed from the operation and can provide broader advice to the CEO as well as much-needed oversight of activities.

As the modern Chair has a hugely expanded role in ensuring good governance across a range of areas, it is increasingly bad practice to have a combined CEO/Chair.

Changing skills of the modern Chair

In the days of Shareholder Primacy, the Chair’s job was to scrutinise the company’s activity to ensure it wasn’t overspending or indulging in activities that reduced the amount the company paid to its investors.

It was largely an economic role and required a financial skill set. The Chair and the board rarely cared about the culture of the company. They were only concerned with how the company’s activities were perceived by its employees and the wider public if it hit the bottom line.

This is why so many Chairs come from a financial background, and while monitoring financial prudence remains important, this skill alone is insufficient for the demands of the corporate world in the 2020s.

People, planet, profit

The priorities of businesses today are often summed up by the phrase ‘people, planet, profit’. This may be an oversimplification, but it neatly illustrates that profit alone is no longer the overriding factor in good governance.

And yet, so many companies still have Chairs whose only real skill sets are financial oversight and dealing with financial stakeholders. Given that Chairs are not only supposed to have oversight of all governance issues but are also in the line of fire when things go wrong, companies can no longer afford to appoint Chairs with such a narrow area of expertise.

People first

A modern Chair needs to have an in-depth understanding of what it means to treat employees fairly. Like all areas of governance, getting diversity, equality and inclusion right is important for its own sake. As is ensuring the right policies to support wellbeing, mental health and a good work–life balance.

Although doing the right thing is virtuous in itself, if you want to be cynical, it still benefits the company financially, because it helps you retain your best staff (particularly important when we have a digital skills crisis) and contributes to job satisfaction and productivity.

There are old-style Chairs who will never see this because they don’t consider employee wellbeing to be part of their remit. They can’t offer the senior executive team the support they need, and in some cases may oppose sensible wellbeing initiatives because they don’t understand the benefits.

Customer service

One of my proudest boasts is that my company has never lost a client through bad service. From time to time, we have willingly taken a financial hit to ensure the client gets what they want. We have achieved this level of retention by actively recruiting people with a genuine passion for customer service. This is a key part of our culture and a reason for our success.

In an increasingly competitive world, customer service is becoming even more important, and companies need a Chair who has a thorough understanding of client relationships. You certainly don’t need a Chair who will pressure you to constantly increase margins to an extent that threatens the longstanding relationships you have with clients.

Understanding disruptive factors

There are numerous other areas where the modern Chair needs knowledge and experience that the traditional Chair did not. Ask yourself how useful to your company is a Chair who doesn’t understand new technology, the implications of AI or the digitalisation of operations?

How are they going to provide oversight if they don’t understand the political or regulatory landscape, changes in consumer behaviour and the investment implications of these changes?

Without an understanding of what is important to businesses today, how are they going to understand your investment priorities and ensure the board has the skills to meet your strategic challenges?

Going green

Meeting your sustainability and environmental obligations is not something your company can do by posting a fluffy statement on your website. Every company needs to take its environmental commitments seriously.

Often, this will come at a financial cost, so the last thing you want is a Chair who isn’t committed to sustainability and sees it only as a cost to be challenged at every opportunity. Yes, part of the Chair’s job is still to question expenditure, but that doesn’t mean they shouldn’t get with the programme.

Balanced board

The most visible responsibility of the Chair is to lead the Board of Directors who scrutinise the running of the business. If your Chair draws up a meeting agenda that doesn’t include regular items such as ‘meeting environmental commitments’, ‘staff wellbeing’ and ‘customer relationships’, then they’re probably not the right person to be governing your business.