Board effectiveness and chair of future — 5 Fundamental forces that define modern chair’s role
Board chairs have seen their roles and responsibilities grow dramatically over the past few years. Chairs today play a critical role in the success or failure of their organisations; they serve as a trusted sounding board and guiding hand for the chief executive officer (CEO).
To get a better sense of how the position is changing and what the chair of the future can expect, the Deloitte Global Boardroom Programme brought together interviews, roundtable discussions and surveys of more than 300 board chairs in 16 countries.
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In these conversations, several striking—and somewhat unexpected—points of commonality emerged. As chairs navigate a new world of challenge and opportunity, the research revealed five fundamental forces of change.
1. Organisational governance needs more chair input
Some fundamental qualities that make for successful chair and board relationships with management have not changed. Having a high level of trust between the chair and CEO, for example, remains essential to a successful relationship between them and to the success of the business.
How chairs can lead moving forward
As traditional roles evolve, chairs can encourage new thinking and help foster innovation.
Chairs should: Serve as stewards of the organisation; help accelerate strategic initiatives; scan the horizon for risks; Cultivate talent and culture; and Support and challenge the CEO.
2. Society expects more from business
Chairs globally see the changing relationship between business and society as another key force affecting their role—and are holding management accountable for it. Without exception, across countries, they feel a deep sense of responsibility for the positive and possible negative impact their businesses have on communities and the planet.
How chairs can lead moving forward
Chairs recognise they play a key role in driving the company-society relationship and effecting positive change through environmental, social, and governance (ESG) strategies and stakeholder engagement. As this responsibility deepens in the years to come, chairs should work harder to: Bring societal concerns to the board; drive stakeholder engagement; integrate ESG into business strategy; promote ESG-aligned performance frameworks; and debate the profitability and sustainability equation.
3. Climate change forces business to respond
Given the enormity of the challenge and the operational, regulatory and reputational risks it poses, climate change is top of the mind for many board chairs around the world. Chairs need to understand these risks to be able to drive the agenda. Meeting the challenge requires close collaboration between the chair and CEO, the board and management team.
How chairs can lead moving forward all chairs agreed on the importance of educating the board on the climate challenge.
Regardless of structure, most chairs coalesced around these necessary tasks: Encourage and, if necessary, “cajole” management. Chairs have a clear role in making sure that management is thinking seriously and taking actions; connect climate change to strategy; bring stakeholders along. Chairs of the future will likely become frontline climate ambassadors between a company and its stakeholders.
4. Crisis leadership is becoming the norm
Encouragingly, chairs have learned a lot about their own and their companies’ ability to respond, adjust and embrace digital technologies under pressure. Concerned that their companies might revert to old ways after a crisis ends, many chairs are working to incorporate agile and responsive thinking and action as part of everyday business.
How chairs can lead moving forward; Get involved at a deeper level. Chairs recognised that crises compel them to intensify their involvement in the company’s activities; “Devolve” decision-making. Paradoxically, while crises can require greater hands-on leadership, chairs and senior leaders must be careful not to stifle local decision-making; prioritise people; and bolster resilience by preparing for the unknown.
5. Board operations
call for digital enhancement and agility
Board operations—the how, when, and where of board work—are being transformed. Chairs of the future may need to balance the new with the perennial: running the board more nimbly and with more flexibility, while safeguarding the fundamentals of providing valuable corporate stewardship.
How chairs can lead moving forward
Chairs expect to capture what is effective from both options by adopting a hybrid model of virtual and in-person board meetings. For example, chairs may use virtual meetings to discuss ongoing board business, such as monitoring progress, financial reporting, and risks. In-person meetings, meanwhile, may be devoted to topics involving the direction of the organisation.
Whatever the mix ultimately looks like, chairs agreed they must strive to: Challenge the agenda; foster balance and control; build consensus; use committees wisely; build and maintain the board community; make diversity and inclusion a governance imperative; and nurturing talent, on the board and beyond.
Board chairs are being held accountable much more than before—by the public, the media, investors, customers, suppliers, employees; and, of course, by regulators. Today’s chairs must walk a fine line between sometimes opposing choices.
Qualities required of a board chair are; build relationships; prioritise for the long term; understand the business; chairs may struggle if they don’t know the many facets of the business, its operations, people, competitive landscape, and culture; lead on purpose and values; be a learning leader; nurture a broader skill set; embrace diversity; and a good listener.
Advice for the chair of the future - Be careful not to overcommit. Given the demands of serving as chair, think seriously about the number of board appointments you accept; Be realistic; build your pathway; manage the transition from CEO to chair; find a mentor.
The writer is Partner, Risk Advisory, Deloitte Ghana
Email: [email protected]