Even with the return of in-person gatherings, virtual meetings have demonstrated their usefulness and are clearly here to stay. Chairs must decide which works effectively under which conditions, and double down on fundamentals to facilitate a successfully functioning board.
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 organization, such as strategy, climate, and technology; important workforce matters such as diversity, equity, and inclusion; and executive pay. To make board and committee meetings as effective as possible, chairs are constantly exploring how prereads and other materials can be deployed to help streamline agendas. Whatever the mix ultimately looks like, chairs agreed they must strive to:
- Challenge the agenda. Chairs say they are giving careful consideration to prereads and other materials handed to them by management. A chair recalled having served on previous boards where management “only made available what they wanted us to know.” Yet many chairs said they must also work to prevent information overload. Chairs may consider, for example, whether materials convey key information without unnecessary detail. “We have moved from a 450-page pack to under 100 pages,” an East Africa chair said. “We are on a journey.”
- Foster balance and control. To achieve consensus and trust, chairs agreed they must work to ensure their boards operate in a respectful way. Some board colleagues may need to be encouraged . “Some directors are more forthcoming than others,” said the chair of a Canadian firm. “And the ones who are not as forthcoming are always worth hearing because they bring a different point of view.” One way to draw out less vocal directors is to expand their responsibilities. The chair of a US company noted, “When we have a director whose voice isn’t as strong in the boardroom as you might want, one of the best things you can do is make that person chair of one of your committees. What happens is they take the bit in their teeth and they step up.”
- Build consensus. To have a successful board, whether in-person or virtually, one of the most important qualities a chair can offer is the ability to build consensus. Chairs stressed that consensus doesn’t mean universal agreement on every subject; it means board members can speak freely and work together in an environment of trust. “We have to understand each other and we have to be able to speak as a board collectively,” said the chair of one US company. “Because on governance matters, [ultimately] decisions are going to be board decisions, and not decisions made by the chair.” A chair from a company in Belgium added, “After the debates, the supervisory board needs to step outside with one voice.”
- Use committees wisely. Chairs universally pointed to the value of assigning committees to work through technical or specialty issues, sparing the wider board from being swamped by too much detail. Chairs in Italy, for example, said their committees debate and explore regulatory and governance themes, including executive pay. Chairs in China also expect committees to play a bigger role in governance, and talent retention, among other areas. The chair of an Indian organization reported forming a digital transformation advisory council. Considering the range of issues facing boards and chairs today, specialist committee or board advisory group work seems only likely to grow. At the same time, chairs in Belgium identified a risk with committee proliferation: If too much gets shunted off to committees, the full board may struggle to oversee key issues. “This is the main reason why an ESG committee has not been established—to ensure that the topic remains firmly on the board agenda,” one chair explained. Other solutions have also been seen—for example, many boards allow every board member to attend committee meetings, should they wish.
- Build and maintain the board community. Chairs help the board gel and evolve from a group of talented individuals into a successful team. Approaches may include having in-person or virtual social gatherings, chairs said. “Zoom drinks” entered the board lexicon, thanks to the pandemic. In particular, chairs agreed that a strong, welcoming induction for new directors is essential to build community and maintain continuity. Chairs across regions also said they welcomed independent board evaluations. A chair from South Africa, for example, noted that these evaluations reveal the strengths of individual directors and also create opportunities to replace underperformers. Ongoing board education is also a must, and education must be targeted to specific needs and goals, such as emerging issues likely to disrupt the industry. Before launching an education program, chairs should consider, “What are our gaps in knowledge at [the] committee and full board level?" Chairs also highlighted the benefits of listening to the views of younger generations via "reverse mentoring" programs.
- Make diversity and inclusion a governance imperative. Chairs emphasized the importance of nurturing new members who may offer different perspectives from those of existing board members. While demographic diversity remains important, diversity of thought and experiences are critical, too. These skills include “an ability to inject creativity and different perspectives into strategy setting and decision-making,” chairs in China noted. As the chair of one US company put it, “It’s not just about diversity for diversity’s sake. You need to take a longer look at where the company is going in terms of its strategy and what skill sets that is going to demand.” And, importantly, a boardroom must be not just diverse; it needs to also be inclusive for everyone to feel able to speak up and share their perspectives and wisdom.
- Nurturing talent, on the board and beyond. This leads to the important question of what role chairs play in developing future talent, on the board and across the organization. While advancement in technology may ease the pressure to some degree, many chairs mentioned an intensifying war for talent, connected to the “Great Resignation” of last year.4 Here, chairs can help set the tone at the top for the best talent to join the organization—either on the board or further down the ranks of the company. “There’s also, with respect to your talent, a whole new notion of what does the future of work look like in my company, how do you recruit and retain the best talent, particularly when we are in an absolute war for talent right now,” said the chair of a US company. Engaging with younger generations in the workforce is especially important here.
Advice for the chair of the future
Serving as an effective board chair has never been easy. Yet chairs are being asked to provide leadership and direction to an unprecedented degree. A key challenge is trying to “find the balance between supervising, facilitating, and acting as a sounding board,” explained the chair of a Netherlands-based company. Different situations will call for all of those roles, the chair advised, “so work on your communication skills.”
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. They should steer the longer-term strategic direction without overstepping; manage the board while encouraging debate and a multiplicity of views; support management while challenging their assumptions; and engage a wide range of stakeholders without being hijacked by every demand.
One chair of a Japanese firm noted, “It is natural that short-term profits should be taken into account, but to be a sustainable company, it is more important to operate the boardroom from a longer-term perspective.” The chair of a UK company advised, “Build a relationship with all stakeholders so you can discuss issues with them in difficult times.”
The following advice, assembled from the collective wisdom of the chairs who participated, may help provide a roadmap for the chair of the future.
Eight leading practices for being a board chair …
1. Build relationships. Create bonds with the board, management, stakeholders, and, especially, with the CEO, while also maintaining the independence of thought.
- In their words (Belgium): “The relationship between chair and CEO needs to function. Only then can you realize an added value.”
2. Prioritize for the long term. Don’t sweat the small stuff. Understand and focus on what really matters.
- In their words (Italy): “Often, top management is focused on some stakeholders and on the short term; the chairman and the board must contribute to broadening the perspective and fostering a long-term vision.”
3. Understand the business. Chairs may struggle if they don’t know the many facets of the business, its operations, people, competitive landscape, and culture.
- In their words (UK): “See and experience the business for yourself. Management reports are not always objective.”
4. 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.
- In their words (East Africa): “Be willing to stand alone if necessary.”
5. Be a learning leader. Confronted with many unknowns, chairs must be comfortable asking for help, continuing to learn and must lead a “learning board.”
- In their words (New Zealand): “As a new or incoming chairperson, regularly seek advice and feedback from other experienced members of the board and collect multiple points of view to form your own perspective.”
6. Nurture a broader skill set. Technical skills matter, but so do emotional intelligence and the ability to draw out the best in others.
- In their words (UK): “Be curious about what is happening in the world and why, whether that be technology, societal change, or politics.”
7. Embrace diversity. Diversity in all its forms drives productive discussion and helps prevent groupthink.
- In their words (India): “We need people with diversity of experience and skill sets who can adapt to the changing environment.”
8. Be a good listener. Adding value to the organization requires listening to those around you, especially when opinions vary, to allow views to be fully explored before drawing a consensus.
- In their words (Germany): “Clear leadership is important, but chairs should always be listening, mediating with, and involving stakeholders.”
… And five for becoming a chair
1. Be careful not to overcommit. Given the demands of serving as chair, think seriously about the number of board appointments you accept.
- In their words (Germany): “Do not underestimate the time and personal commitment that the serious exercise of this responsibility entails.”
2. Be realistic. This is a prestigious position, but one that carries great responsibility. Be prepared to roll up your sleeves and work hard.
- In their words (Ireland): “It’s a much tougher job than people think. You really need to immerse yourself, especially in the beginning.”
3. Build your pathway. Most chairs have held other board positions prior to taking the leadership role.
- In their words (East Africa): “My best learning has been from other seasoned board members and chairs, listening and observing how they do it.”
4. 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. This is something to watch, especially in the rare circumstance of moving from CEO to chair within the same company.
- In their words (East Africa): “The challenge is when you [still] want to be an executive, yet you are [now] a nonexecutive chair.”
5. Find 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.
- In their words (US): “Get somebody who’s been through it all. Been a CEO. Been a chair... And let them talk to you about things they did well [and] things they didn’t do well.”