Directors need skills that underpin good chairing

The role of board chair is changing, and lead independent director — previously very much a backroom job — is morphing into something much more. 

The chair’s role has been undergoing a steady evolution over the past few decades. While chairs were often filled by successful executives at the end of their careers, the post has become far more demanding and high profile. It also requires a complex set of skills that do not necessarily fit with those acquired by high-performing executives.

In a 2014 article, Deloitte made the valid point that shareholders were attaching more value to the quality of an organisation’s corporate governance structures. Seven years and umpteen corporate scandals later, there can be little doubt that this is even more true now. An effective board is the backbone of a quality and effective corporate governance framework, and the chair is the linchpin of the board.

So, what are the main elements of the chair’s role? In a King IV practice note the Institute of Directors in SA (IoD) sets out the core functions of the chair in the following categories:

• Regarding the organisation, the chair is expected to represent the organisation at AGMs and similar shareholder meetings, in engagements with key stakeholders and at other functions where appropriate, including industry events.

• Regarding the governing body, the governing body or board is ultimately responsible for setting the tone at and from the top and providing ethical and effective leadership,  all of which stems from the way chairs do their job. The practice note identifies many specific duties the chair must fulfil, but the “art of chairing” should be emphasised. By this is meant the chair’s role in facilitating the overall functioning of the board, which would range from ensuring board members understand their role and get the right quality and quantum of information, but also that the time spent in the board meeting itself is well used. This would include keeping the discussions focused, ensuring dominant members are curbed to give everyone space to contribute and guiding the board towards making a good decision.

• Regarding management, chairs act as the link between the board and the CEO and their team. To do so, they have to cultivate a professional relationship that is constructive and collegial but that maintains the necessary distance, and thus independence. At times of crisis, the chair can play a key guidance role for the CEO.

One of the big changes from King III to King IV is the latter’s recommendation that a lead independent director be appointed in every instance. By contrast, King III recommended this only in instances in which the chair was not independent.

The reasoning behind the change is based on the recognition that the chair’s role is so complex and important that it needs the support that only a lead independent director can give. Examples would include giving the nonexecutive board members a stronger voice, especially when there is a dominant chair, thus contributing to a better balance of power and reinforcing accountability.

A lead independent director can also mediate when conflict or dysfunction in which the chair is implicated threatens the board’s ability to function.

One of the significant trends of the last several years has been the professionalisation of directorship in response to the greater importance placed on the board’s role and growing portfolio of skills needed. The Institute of Directors has taken the lead in SA, launching two certifications — the certified director and the chartered director.

Both are aimed at giving directors and would-be directors a way to acquire and objectively demonstrate that they possess the skills a modern-day director needs, and have a way of keeping those skills current.

A pool of professional directors would be just what this country needs to get its public and private sectors functioning well. In line with this trend we might also begin to see the emergence of a distinct category of professional chairpersons  ̶  professional directors who have taken the trouble to acquire the skills — hard and soft — that underpin good chairing.

The unsung hero of the corporation, the chair, is clearly set to play a more high-profile role in future.

• Natesan and Prof Du Plessis are respectively CEO and facilitator at the Institute of Directors SA.