Board effectiveness and the chair of the future: Five fundamental forces that define the modern chair’s role

Chairs today play a critical role in the success or failure of their organizations; they serve as a trusted sounding board and guiding hand for the CEO.

But huge developments are redefining the role in real time: unforeseen events, such as the COVID-19 pandemic and geopolitical disruption, add to the inexorable challenges of digital transformation, climate change, increasing regulation, and investor scrutiny. Yet as they become more active on virtually every front, chairs must also take greater care to respect the boundaries between their role (governance and oversight) and those of the CEO and the C-suite team (management and operations).

As part of its Boardroom Frontier series, in early 2022 the Deloitte Global Boardroom Program surveyed more than 500 directors and C-suite executives and spoke to leaders, directors, and subject matter specialists to find out what’s being done in boardrooms around the world when it comes to technology. Are boards stepping up to meet the new demands of expanded technology use? What are they doing to ensure that technology investments are linked to strategic objectives?

Five forces of change

The primary focus of the chairs’ advice is on the evolving role of the chair and how behaviours of chairs can pivot during periods of challenge and upheaval. Several striking themes emerged from these interviews around the world, which are described in this report as the five forces of change.

1. Organizational governance needs more chair input
   Some fundamental qualities that make for successful chair and board relationships with management have not changed. But chairs increasingly need to act as a guiding hand on topics ranging from resilience to technology and culture: On top of that they can also succeed by focusing on innovation, digital transformation, improved efficiency, and speed.
2. Society expects more from businesses
   Chairs globally see the changing relationship between business and society as one of their key areas of focus. Most chairs acknowledge a responsibility to prevent harm to local communities and address society’s most pressing challenges. Some emphasize a more urgent need to secure society’s acceptance of business operations as part of a social license to operate.
3. Climate change requires businesses to respond
   Chairs are increasingly preoccupied by the enormity of climate change and the challenges and risks for the company, whether regulatory, reputational, or operational. Meeting these challenges requires effective partnership between the chair and the CEO, the board and the management team. Chairs believe boards can play a vital role by placing climate change high on the agenda.
4. Crisis leadership is becoming the norm
   Managing crises today calls for greater speed in decision-making, action, and communication, under greater public scrutiny than ever before. Operating in crisis mode has had its benefits. Encouragingly, chairs have learned much about their own and their companies’ ability to respond, adjust, and embrace digital technologies under pressure. Many chairs are working to incorporate agile and responsive thinking and action as part of everyday business.
5. The board now operates in a hybrid and agile mode
   Chairs adjusted quickly to the pandemic, leading board meetings virtually. Many found participation improved and meetings became more agile, shorter, more frequent, easier scheduling, and often more focused. This agility has led to greater understanding that boards can convene at short notice to discuss a matter of urgency. Yet many chairs and board members miss some key aspects of face-to-face interactions, like reading the room and picking up on nonverbal communication.

Advice for the chair of the future

What will the "chair of the future" look like? The following advice, assembled from the collective wisdom of the 300 chairs who participated, may help provide a road map for the chair of the future.

Eight leading practices for being a board chair…

• Build relationships. Create bonds with the board, management, stakeholders, and, especially, with the CEO, while also maintaining detachment and independence of thought.
• Show decisive leadership. Empathy is important, but so is being assertive, when necessary.
• Understand the business. Chairs will struggle if they don’t know the many facets of the business, its operations, people, competitive landscape, and culture.
• Lead on purpose and values. Chairs must make tough and, at times, unpopular decisions in the long-term interest of the reputation of their organizations.
• Be a learning leader. Confronted with many unknowns, chairs must be comfortable asking for help and continuing to learn and lead a “learning board.”
• Nurture a broader skill set. Technical skills matter, but so do emotional intelligence and the ability to draw out the best in others.
• Embrace diversity. Diversity in all its forms drives productive debate and discussion and helps prevent groupthink.
• Be a good listener. Adding value to the organization requires listening to those around you, especially when opinions vary, to ensure views are fully explored before drawing a consensus.

… and five for becoming a chair

• Be careful not to overcommit. Given the demands of serving as chair, think seriously about the number of board appointments you accept.
• Be realistic. This is a prestigious position, but one that carries great responsibility. Be prepared to roll up your sleeves and work hard.
• Build your pathway. Most chairs have held other board positions prior to taking on the leadership role.
• Manage the transition from CEO to chair. If you have stepped up from CEO to chair, the transition, particularly of your mindset, can be challenging, especially for first-time chairs.
• Get a mentor. Chairs are willing to support each other. Find someone who has already experienced the challenges to help you embrace your first chair role with confidence.