What Makes A Great Chairperson?

Should it be the CEO? Should it be a family member? Should it be an Independent Director? What does it take for them to do a great job?

What is the job of a Chairperson?  It is not just to create the agenda, to call for the vote, to serve as the representative of the business. In all the boards I have seen, the best Chairperson was always the one who spoke last, who listened, and found a way to build consensus while still holding true to the values of the business.  Like a great orchestra conductor, a great chairperson hears all the parts of the symphony being played, the strings, the horns and the woodwinds, and finds a way to bring harmony from the various viewpoints .

In a family business, the Chairperson’s role is frequently a way to move a member of an older generation out of an operating role, while still giving them a position of honor and influence.  Very often, the Chairperson’s role might rotate among various branches of a family.  For example, in a company I visited in India, there are five branches of the family who rotate the Chairperson’s role among them every three years, ensuring that each branch gets its turn in the spotlight.  I am not sure that this is always the best qualification for a Chairpersonship.  However, it might be the best thing for family harmony.

In some instances, in family companies, putting a non-family member in a Chairman’s role is also an effective way to ensure family harmony.  The independent chairman can blend the various perspectives of the branches of the family in a way that ensures the best outcome for the business while remaining neutral among the various family interests.

Finally, in many family companies, we see the Chairman and CEO roles are held by one person, particularly in the first generation.  But, as the business matures past the first or second generation, it is not uncommon to see those roles separated.

If you are looking to become a better Chairperson here are some best practices that we have seen:

• Avoid the ticking time bomb – don’t wait for the dinner before the meeting to find out what is on people’s minds. Pick up the phone and call all the board members before the meeting.  It might take 5 minutes, or it might take an hour, but you will avoid unpleasant surprises in the boardroom.  More importantly, the board members will feel appropriately valued.
• Don’t be a dictator - seek input and consensus around agenda items. Be proactive – ask each of the board members what they might want to add to the agenda for the upcoming board meeting.
• Know when to cut off a discussion. Sometimes passion gets ahead of intelligence in board meetings. Discussions run down a rabbit hole or get sidetracked from the issue at hand.  A good Chairperson knows when to call a halt to the discussion or when to let the passions air out to reduce conflict.
• Let everyone have a voice in the boardroom. Don’t let your point of view bias the discussion among the board members.  You might be tempted to cut off discussion too soon because you have a pre-determined perspective on the outcome.  Finally, be the last one to talk – it will let the room breathe.  It also earns the respect of your fellow board members when you take the time to listen first before talking.

When we are asked whether the Chairperson should be a CEO, family member or independent director, our answer is what matters more is that they use these tools to get the most out of the board.  By respecting both the family and other independent directors, by listening carefully and communicating effectively, odds of success improve significantly.

If you would like to learn how much to pay a great Chairperson or board member, and benchmark your current board performance against a peer group, you can participate in the joint Forbes and Lodestone Global 2017-2018 Private Company Board Compensation Survey. A summarized report will be available to all survey respondents, once the report is completed.

If you have a private board, or you are a director of another private company, we need you to participate in the survey by responding on behalf of that organization. It takes less than five minutes to complete. Please be assured that your name and the company name will not be disclosed - your responses are all private. We will use the aggregated data to generate the summarized report.

If you participate in this year's survey, you will be the first to receive the summary report, and you will have access to proprietary data that hasn't been shared with the public.

Complete the survey by clicking here: 2017-2018 Private Company Board Compensation Survey

Please contact us at info@lodestoneglobal.com to learn more or if you have any questions.

If you have additional questions on Strategy or Governance issues – please comment below! 

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