It will tell you something about what the board has seen as its priorities, how it makes decisions and where it has made trade-offs. Minutes can also tell you something about the kind of culture the board is creating. I also constantly think about the balance between change and continuity. Too much change and a board can lose its expertise, too little and it can get complacent. Effective chairmen balance this well. I took my first chairman role at the beginning of the year, so have recent experience of preparing for the job.
I had also watched my strong and experienced incumbent chair for a couple of years beforehand. The tone in the boardroom is clearly set by the relationship between the CEO and chairman.
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To reinforce her new style Macleod organized mini-evaluations at the end of each board meeting, asking directors to recall instances when she acted as an expert rather than as a process facilitator. Often when ex-CEOs become chairs, they start looking for metrics to evaluate the performance of the board with.
Some even engage strategy consultants to help develop such indicators. Franz Appenzeller, who currently chairs the boards of two Swiss multinationals, knows better. While the quality of the outputs cannot be accurately measured in real time, the quality of the inputs can. And if the inputs are good, the desired outputs will—in general—follow. For Appenzeller, five inputs are critical: people, board agendas, board materials, board processes, and board minutes.
He sees it as his job to ensure that they are first-rate. For him, the most crucial input is people—that is, making sure the board has the right human capital. He creates—and annually updates—competency maps, or descriptions of specific skills and knowledge that his boards must possess collectively, and compares them against online self-evaluations of the directors every year and with external assessments from consultants every two years.
If there are gaps, he works with the nominating committee or shareholders to plug them by bringing in new directors. Appenzeller wants to know how well his agendas cover strategy, executive appointments, compensation and succession, investments, risk, compliance, and disclosure.
He also gets feedback on his own performance: How well does he frame questions, facilitate exchanges, articulate decisions, and conduct reviews? How about his work outside the boardroom—his interactions with directors, availability, and proactivity? Board chairs interact frequently with management, particularly the CEO.
The chair and the CEO may review board agendas and materials, finalize company press releases, follow up on board decisions, or meet regulators together. In some cases chairs even visit customers or vendors, attend press events, or hold meetings with government officials—all additional opportunities to connect with the CEO. Good chairs do not make this mistake. They always remember that they represent the board and keep the other directors informed about all new developments and insights.
In his early days as a chair, he opted for intensive and informal interactions with CEOs. One welcomed that approach, but two others felt he was encroaching on their territory. This model backfired when one CEO made a disastrous technology decision without consulting anyone, including Liu. The actions of the CEO were perfectly within the agreed-upon boundaries; asking advice in areas where he lacked competence was not part of the deal.
It took Liu over 10 years to develop the approach he uses today. I organize the content and the communication process so that the CEO gets it. Second, as one of the directors, I may personally do something for the CEO, just because I have the skill or the knowledge.
The relationship with them is a key concern for the chair, who tends to be their primary interface with the company. With public companies, regulations severely restrict how and when communication between the board and the shareholders can take place, but the intent is to ensure equal and fair treatment of all shareholders, no matter how large their holdings.
Equal treatment of investors is also important for private companies, but there chairs have more freedom in structuring shareholder relationships. Not serious. But when the whole board speaks to them, they listen. So I always remind shareholders I am an interface between them and a board. He has developed a point questionnaire that covers such areas as investment horizons, appetite for risk, thirst for dividends versus growth, preferences for speed and modes of growth, and level of attachment to the company.
Once every two years he asks every shareholder to answer those questions, reports the findings to the directors, and discusses with them the implications for the company and its strategy. He budgets four full working days a year just for meeting with shareholders. The board can benefit from their experience, knowledge, networks, and other resources, provided—and this is a big proviso—they stay out of the boardroom.
At another board, he offered his resignation when a shareholder sent him a memo asking him to make the board approve an acquisition. She resolves conflicts at the board by being fair, consistent and attentive to individual board members, but keeping in mind her ultimate mission — long-term interests of the organisation.
A good chair effectively represents the board in relations with its key stakeholders — shareholders, regulators, management, communities and ensures that directors are fully informed, but does not replace the company executives in their dealings with the stakeholders unless this responsibility has been explicitly given to her by the CEO and directors.
If crisis strikes a good chair… well, she remains a good chair. She thinks about the interests of the organisation, takes a long-term view, and sticks to her mission - to lead the board and to make its work effective.
If the situation requires it, a good chair is prepared to sacrifice personal interests for the interests of the company — to deal with unpleasant counterparts, to put in as many hours as needed and even to step down from her job.
A good chair knows when and how to leave. She does not designate a successor, but lets the board choose its new leader. The outgoing chair makes her intention to step down known to directors early, leaving enough time 6 to 18 months to select a successor and to prepare them for the job. The majority of our participants felt that the programme had helped them to realise that they have the humility and the guts to do what is right, but they admitted to the need to sharpen their listening, challenging and supporting skills.
For this, we believe that they had all made another step towards becoming truly good chairs. A very useful article for me. I believe that to listen better one has to develop love for other's and de link himself from thoughts , agenda of the past or fur the future. One ha sto be present where the other person is and create a comfort space and this can result into some very powerful and m,eaningful conversations both at work and at home. I thought this was a very interesting article and echoes some of our own research at Tomorrow's Company.
Company chairmen play a role that is remarkable and hugely complex, one which is becoming ever more demanding and important. We have recently published a series of 'letters to a new chairman' which have been serialised in the Financial Times and celebrates and explores what makes great chairmen, now and in the future. Sent from a list of different characters — a chief executive, a chief finance officer, a non-executive director, an institutional investor, and so on — the letters form a collective pep-talk and agenda-setting exercise for the new chairman.
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