File Image: IOL
File Image: IOL
Dr Prieur du Plessis
Dr Prieur du Plessis
Parmi Natesan
Parmi Natesan

JOHANNESBURG - The role of the chairperson has evolved into one of the most challenging in the corporate world - and possibly the least understood.

In days gone by, chairing a board was seen as a way to end a successful career as an executive.

However, evolving governance codes like King have placed more and more emphasis on the importance of the chairperson’s role at the apex of the company.

Let’s begin by considering what the job actually entails.

Everybody knows what a chief executive does, but a chairperson’s role is less well understood.

The IoDSA notes that the primary role of the chairperson is to provide leadership to the governing body of an organisation and set the tone for its performance.

With regard to governing body composition, the chairperson should help to select new members of the governing body and committees, and ensure that they are inducted properly, mentored where necessary, and that ongoing professional development is made available.

When it comes to meetings, the chairperson is both presiding officer and facilitator - a multifaceted role that requires great skill. He or she should ensure members have enough information, are properly prepared and make a contribution.

The chairperson has to keep discussions focused and encourage reluctant members to air their views, and decide when additional interventions and meetings are necessary.

Perhaps the most important job of the chairperson is to facilitate the arrival at sound decisions.

As Sir Adrian Cadbury, the founding father of corporate governance, once observed: “The chairperson’s job is to see the board reaches not merely a consensus but a good decision” - and that the decision is acted on.

Chairpersons also work closely with the chief executive and company secretary to set the annual work plan and the agenda for each meeting, and ensure the company secretary minutes proceedings properly.

Chairpersons additionally have a responsibility to represent the organisation at shareholder meetings and may even be called upon to attend some industry events.

They also play a critical role in relation to management, providing the link between the chief executive and the governing body.

They should build a close but professional relationship with the chief executive and the management team, providing counsel and mentoring, especially during times of crisis.

The chairperson will also take the lead in assessing whether the chief executive is performing adequately. He or she will furthermore oversee the performance of the company secretary.

It should be apparent that the chairperson’s role is both complex and demanding, and requires an individual who is both strong-minded and tactful, with firm convictions but willing to guide people to conclusions rather than imposing them.

Right mindset

Research by Insead on what makes a good chairperson suggests that the right mindset and enough time to commit to the role are the most important criteria for a good chairperson, with the most desired personal traits being personal humility, listening while challenging and supporting the board, and the guts to do what is right for the company.

The concept of a lead independent director (LI) was introduced in King III as a recommendation only when the chairperson was not independent.

King IV now recommends that an LI member of the governing body should always be appointed. Without undermining the role of the chairperson, this essentially recognises that the chairperson’s role warrants a certain degree of support. The LI can act as a sounding board for the chairperson, and can lead in his or her absence.

He or she will also lead the chairperson’s performance appraisal.

The LI can additionally help to amplify the voice of other governing body members, and can help resolve problematic board dynamics.

In conclusion, “the chief executive may get the glory and the salary, but leading the board is an increasingly important role, requiring subtlety, maturity and an iron grip on the agenda,” said Andrew Saunders in Management Today.

It should be understood that the chairperson’s role has developed to such an extent, and the mix of attributes is so unusual, that it is now really not appropriate to see it as the last job in a long career.

Rather, it is emerging as a new role for a mature governance specialist; just as directorship is becoming a profession, so in time it is likely we will see people working towards a chairmanship as a career goal rather than a part-time appointment.

Parmi Natesan and Dr Prieur du Plessis are executive director: Centre for Corporate Governance and chairperson of the Institute of Directors (IoDSA) respectively.