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How To Be An Effective Chairperson During Uncertain Times

Volatility and uncertainty remain as the world emerges from the Covid emergency, with the war in Ukraine, disruption of supply and distribution due to sanctions, soaring inflation, the prospect of recession and murky geopolitics.

For boards serious about navigating these challenging times they need to have a chair who takes the appropriate steps to ensure they remain an effective decision-making and value adding asset that drives long-term business growth.

To this end, the chairperson must deliver:

Role clarity
This is the foundation of an effective board. Good chairs clearly understand their role in helping the board to add value to the organisation, the demarcation of responsibilities between themselves and the CEO, and ensure each director is clear on their role in contributing to the work of the board. They also ensure board clarity on where their role ends and that of management begins. Any ambiguity and confusion over roles on the board, particularly in a volatile world, will have a negative impact on board effectiveness and decision making.

Additionally, chairs should have clarity about the value they add in leading the board, which includes board composition, workplans and calendars, that reflect this value delivery.

Agile boards
It’s critical that the chair understands the importance of agile and adaptable boards at this time of significant upheaval. Good chairs recognise that what worked well during the Covid crisis might not work so well today. Therefore, it’s vital the chair engenders an adaptable and agile board as their business navigates its way through these uncertain times.

Future strategy
The chair needs to focus the board on future strategy – how the organisation can achieve its purpose during these uncertain times – by looking at new opportunities, rewards, as well as the risks. To achieve this they need to make future strategy live in the boardroom – not something the board focuses on once a year.

Challenge assumptions
Boards can too often make decisions based on assumptions, which can be very damaging for their organisation. This is particularly the case when it comes to the interplay between the three critical elements of risk, strategy and return, which can too often be based on assumptions. It’s the role of the chair to ensure that assumptions are challenged to validate their relevance. Only then can the board have assurance that they are on the right path. Being challenging in this way is particularly important during periods of volatility.

Emotional intelligence
In an increasingly virtual and challenging world there’s a need for adaptable, agile leadership. This requires the chair to evolve away from the traditional command and control style to a more facilitative leadership – one that embodies emotional intelligence. This sees chairs create and nurture a board culture of psychological safety, where bad news travels to the board more quickly than good, where directors have the courage to constructively challenge, and where it is fine not to have all the answers, particularly during these difficult times.

Relationship with the CEO
The most important relationship in the governance system is between the chair and the CEO, due to the enormous impact it has on the performance of the company. The foundation of this relationship (as I’ve already touched on) is based on role clarity that the chairperon is the leader of the board and the CEO is the leader of the business. If it’s to be a value adding relationship it also needs to be one built on trust and respect, where there’s candour and honesty on both sides. Forward thinking chairs reflect on how well this relationship is working and take the opportunity to recalibrate, where required, to ensure that the rapport is an asset to the board and the organisation.

Appropriate Board composition?
It’s up to the chair to consider whether the current composition of the board is the right one to take the organisation forward and ensure it is fit for the future. This involves looking at their board through the prism of the five drivers of diversity™- demographics, skills, experience, thinking styles and circles of influence – and contemplate how well the current line up matches up. True board diversity is broader than any one of the five drivers™ and delivers wider perspectives, improved decision making and outcomes.

With the rapid pace of change in the technology and digital worlds, and its impact on business, it’s important to recognise that boards need directors with the skills and practical experience in those areas. Only then can they realise the opportunities for their organisation.

To be effective, the chair needs to:

Embrace the technology
While ‘you are on mute’ was the term of 2020, most boards have now adopted processes and ways of working that demand the leader of the board is adept at using technology for meetings.

Manage reviews of the CEO and directors
In crisis mode during the health emergency many organisations stopped undertaking reviews of those on the board. If they have not already done so, it’s the time to re-start them.

Those on boards derive substantial benefit from a structured and systematic performance review at least annually, with clear accountability and follow up.

As it’s the role of the chair to ensure that the board, CEO and even themselves are ‘fit for the future’, they must lead and manage the review process.

Any review must deliver a 360-degree evaluation of those on the board. It’s the best way to find out if they have the capacity, capability and culture to deliver success for the organisation in the future.

Once complete, these assessments might prompt the board to consider if a different director is needed to improve effective decision making and help drive business success.

Planning for succession
To maintain business continuity undertaking succession planning for the CEO, themselves and board members, is a key focus for the chair. The chair and the board not only need to prepare well in advance for planned departures, such as retirement, but also unexpected ones, such as due to illness, or not being up to the task in hand, post review.

This avoids the potential for disruption to decision making by the board, and reduces the risk when recruiting a new director. The succession plans for all on the board need to be reviewed annually, to ensure the right leadership team is in place, so it can achieve its purpose.

Director onboarding
The chair needs to take the lead in the planning and implementation of a thorough induction for new starters to the board. This involves a bespoke “journey of learning” that should unfold over 18-24 months. It must include formal governance and company specific governance training, organisation, customer and sector experiences, and an effective buddy system.

Taking this approach helps to ensure that new directors make a valuable contribution to the board as quickly as possible – vital during challenging times – and bring the onboarding process into the 21st century.

It’s no longer acceptable to dump a pile of reading material on a new director and expect them to hit the ground running.

By taking these important steps chairs will ensure their board continues to be an effective decision-making asset that drives business growth during these volatile times.

Those chairs that require a 360-degree review and / or training to help them deliver effective boards, or support with wider governance matters, should contact our highly experienced team.

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