Author's Name: Mark Schultz
Date: Tue 27 Sep 2016

The Chairman of the Board – first among equals

The role of the Chairman of the Board, whether it be a for-profit or non-profit organisation, has evolved over the years to today being one that takes ultimate responsibility for the overall performance of the organisation. In this article, we will discuss the role of the Chairman from both an internal and external perspective and highlight the importance of this position in the organisation’s quest for good governance and sustainability.

The internal perspective

The above governance organisation chart provides an overview of the governance structure that is created to deliver an organisation’s mission. As we have discussed this framework in detail in previous articles, suffice to note here that the Chairman is the representative of the Board who provides leadership to the board itself and is the conduit by which communication and direction is given and received up and down the organisation. These functions are effected through:

  • Taking the Chair at board meetings and ensuring the proper working of the board;
  • Ensuring the responsibilities of the board are fulfilled during the year, (an annual agenda is a useful tool to assist in this process) e.g. strategic planning, risk management, compliance, performance management;
  • Safeguarding the separation of powers between the board and management through the development, implementation and monitoring of applicable policies and procedures;
  • Supporting the Chief Executive, as well as being the lynchpin that provides direction and accountability for performance of the business operations;
  • Ensuring the board and management accept appropriate responsibility and accountability for the performance of the organisation, at the strategic and operational level respectively;
  • Providing leadership in the development and protection of the organisation’s culture and values; and
  • Ensuring probity is maintained in accounting, reporting and all other aspects of the business activities.

The Chairman’s position should be rotated on a basis that provides stability, continuity and effective leadership, without creating an environment that produces complacency, group think and even hubris.

The external environment

In today’s rapidly changing and connected world, engagement and management of external stakeholders has become an important component of good governance. Social media has given a voice to so many more stakeholders, and despite the presence of the uninformed and ignorant social media commentators, the board must not be in denial about its presence and potential adverse impact on the organisation if not handled appropriately. In this respect, the Chairman of the board’s role includes:

  • Being the public face of the organisation and ultimately being seen as the reason for the success or failure of that business;
  • Maintaining good relations with key stakeholders, through the board’s collective process of assessing who the stakeholders are, their connect with the organisation and the potential influence each may have on the organisation’s performance;
  • Representing the organisation in the public space including all forms of media and public events; and
  • Being a champion of the organisation; this can also have a positive or negative (depending on how well this is done) impact on the internal environment through eliciting a feeling of pride and mutual respect.

This external role places an added responsibility on the Chairman in terms of behaviour. As an example, recently the AFL experienced very negative responses and feedback due to the behaviour of two radio commentators who just so happened to be AFL Club Presidents. Each claimed to be just joking and providing entertainment in their “day jobs”, yet I wonder how this was perceived by other stakeholders of their Clubs. I don’t believe you can have two or more sets of behaviours, each relative to what you are doing at the time. It causes confusion, impacts on respect and maybe even sends the wrong message i.e. its ok to behave differently and even in a contradictory manner by simply saying “this is a different role and therefore I can say or do this!” The advice here is - do not confuse your stakeholders by having different behaviour patterns, it is not good governance or leadership - behaviour is a personal choice and the Chairman’s behaviour should reflect and mirror the organisations values and principles at all times.

In summary, the role of Chairman of the board should not be offered nor accepted without a very clear understanding and acceptance of the duties, responsibilities and expectations of this position. “First among equals” is an appropriate characterisation of the role of the Chairman in any organisation and getting “it right” is the first step towards good governance.

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