Leadership - Chairman
Chairman
General
The chairman runs the board.
The chief executive officer runs the business.
The chief executive officer reports directly to the chairman, but is responsible for ongoing decision making in the business, in effect delivering the strategy agreed by the board.
He or she will make sure organisational goals are met.
An autocratic boss may be more likely to ignore danger signals especially if he or she has been in the position for some time.
However, this is less likely to happen when there are frequent discussions and debate between chairman and CEO.
The chairman is responsible for hiring and firing the chief executive officer, usually with board approval.
He or she has to monitor the performance of the CEO while providing necessary support and guidance.
The main role of the chairman is to ensure that the business is being run in an appropriate manner, and fulfilling all its obligations, both legally and to the best interests of the company and shareholders.
In this respect requirements might be:
- Directors liability insurance.
- Internal control structure.
- Risk management systems.
- Internal and external audit functions.
- Developing the mission of the organisation.
- Policies for the overall purpose of the organisation.
- Planning better board meetings.
- Setting the agenda in liaison with the CEO and company secretary.
- Focusing on priorities.
- Making the best use of the time available.
- Providing equal opportunity for discussion and decision making.
- Establish an effective feedback system for task control.
- Establish good meeting techniques.
- Use of a casting vote at meetings if necessary.
- Authorising the expenses of the directors and CEO.
- Reporting of performance and profit information.
The chairman must ask the uncomfortable questions. The chairman will need to ensure the board is acting and behaving as a team and working in a cohesive manner. It is possible that the chairperson can hold too much power or he or she takes on too much having been allowed to do so by other managers.
You should be clear on what you as a chairman will delegate.
Each chairman needs to establish his or her own approach depending on their circumstances.
Like any good manager get to know your staff and their names as well as possible.
As a leader listen well.
Contract?
The chairman should be independent, objective and have a less detailed view of the business than the directors.
To this end it has become fashionable to seek a chairman from outside of the organisaton utilising a service contract.
A typical period is 3 years.
It is not considered desirable for the chairman to be the outgoing CEO.
This trait will breed a chairman who is likely to interfere and possibly undermine the CEO due to being to familiar with the daily working of the organisation.
The chairman maintains effective relationships and communications with all the major shareholders and the financial media, leaving the CEO free to run the business.
The media role is particularly important where information may impinge on the share price.
The chief executive officer tends to be more associated with the business media about business issues.
Many chairman will serve a number of companies as chairman.
Many well known organisations still have one person in the role of chairman and CEO.
The roles of chairman and CEO require significantly differing capabilities.
If the CEO is not performing it is up to the chairman to remove him or her.
If the chairman is not appointed via a service contract he or she is elected in accordance with general business practice and in accordance with the company‘s constitution, the directors, as a Board, elect the chairman from the directors.
The chairman will be a Non-Executive director who is selected on the basis personal achievements and his or her record as a leader.
The position of chairman will be reviewed by the Board at the first Board Meeting following the AGM.