“When Jack Krol became the lead director at Tyco International, in 2003, he developed, in conjunction with CEO Edward Breen, a document specifying his own role. With input from the board, the governance committee then developed some general characteristics of the role for whoever would succeed Krol in the future. Krol said three competencies or characteristics were deemed most critical.
First, Krol said, “the ideal candidate has to have stature with the other directors and be seen as a leader in the boardroom.” Krol also noted that “the ideal board leader is an engaged and thoughtful director. This candidate adds value during board deliberations, with significant comments when compared to others who may talk more but, over time, indicate a lack of substance”—adding that “you just know it when you see it.” Second, “the candidate must have compatibility with the CEO as well as good chemistry, and the person should not be adversarial.” Third, “the candidate must express interest and have the time to do the job.””
Dennis Carey, John J. Keller, and Michael Patsalos-Fox, McKinsey Quarterly (May 2010)
Whatever you call it – chairman, lead director, presiding director – the position of the non-executive chairman of the board of directors is a very special one indeed. That is why it requires special attention. It is also why this job is not for everyone.
Jack Krol, chair of Tyco, was quoted in the McKinsey article excerpted here. He points out that chairpersons need three essential qualities: they must be natural leaders who command stature and provide real substance; they must not be adversarial in nature and should reach across to all board members; and they must be actually interested in the job and commit themselves thoroughly in terms of time and involvement.
My perambulations through multitudes of Kenyan boards over the years suggest that these criteria would eliminate many current chairmen.
I have also noted that we specialise in two particular types of chairpersons. The first is the overweening, self-important, pompous noble who imagines that as chairman he is top of the organisational tree: the most important personage in the company, the final decision-maker, entitled to the most perks. The second type is the stooge, the weak-willed, amiable softie who serves as an empty suit, a ceremonial panjandrum. This person actually makes no decisions whatsoever; he merely ensures that the board fulfils the wishes of a powerful shareholder or charismatic CEO.
Both those archetypes cause huge problems. Both are misreadings of the role of chairperson, and both lead to dysfunctional decision-making. We need to move away from these tired old models of chairmanship towards a more enlightened view.
A chairperson is, first and foremost, a leader. But a leader of the board, please note – not of the organisation. It is not the equivalent of the president of a country. The chairperson’s fundamental role is to ensure that the board of directors is an effective decision-making organ – that it provides both direction and insight to the CEO, as well as scrutiny of the policies and actions of the organisation.
Equally, the chair is not there to order people around or whip them into shape. A lead director is first amongst equals, and must engage and respect all his or her fellow directors. Personality is therefore an important element here: people who have natural chemistry with peers, who respect the viewpoints of others, who can move decisions towards consensus – these are the people who should lead boards.
You are, I trust, now convinced that this is not a position to be decided by rotation, or on the basis of seniority, or on the whims of shareholders or governments. Chairpersons must be fit for purpose, and a very special purpose at that. More on this theme next week, same place.