Make the right role decisions
Chairs are, of course, not all alike, and neither are the circumstances they face. The implication is that the Chair needs to be thoughtful in deciding how to play the role. Three key decisions are whether to:
Supervise or support. Of course, every Chair needs to monitor the CEO’s performance through appropriate reporting, auditing, and supervision. But they need to explicitly decide whether, to what extent, and how they will provide support in the form of coaching and/or mentoring. Indeed, depending on the context the organization is in, simple, complex, or chaotic, and depending on the readiness and maturity of the CEO, the Chair needs to tune his or her role.
Be passive or active. The relationship between the Chair and the CEO is quite different if the Chair enacts an active role in the company. Being active can mean representing the company in dealings with external stakeholders in ways that the CEO cannot, connecting with the parts of society that are less on the radar screen of the management team, or simply less reachable. Critically, however, it doesn’t mean engaging as an immediate decision-maker.
Focus more on the inside or the outside. Given limited time, where should the Chair focus his or her attention? If an internal strategy is well established, a restructuring is required, or a culture transformation underway, the Chair will focus more on internal issues, engaging in supervision or support depending on the need. In a well-aligned, finely-tuned organization, the need to deal with external issues related to technology, regulation, political instability, and social transformation will lead the Chair to have more outside focus.
Manage the transition
Like all challenging transitions, it’s essential to get off to a strong start. Here are some things new Chairs can do that help:
Require world-class transition support. To make the process of shifting roles as efficient and effective as possible, both the new Chair and the CEO must have an excellent transition support process. This includes gaining alignment on roles, setting ground rules and operating principles (for example, concerning escalation and communication.)
Get a mentor. If the CEO’s job is lonely, the role of the Chair is lonelier still. By the nature of the role, the Chair cannot develop trusted-advisor relationships with members of the executive team or with key external advisors who work with the company. Advice from experienced Chairs is invaluable in helping to avoid common traps, make sound decisions, and navigate Board politics through the transition and beyond. Mentors need not come from within the same industry or region.
Cultivate a network of advisors. Considering the small size of their team, the successful Chair relies on expert advice on board renewal, strategic reviews, M&A, and more. He or she is keenly aware of advisors’ potential conflicts of interest and finds ways to manage them to serve the firm better. Great Chairs often rejuvenate their Board to ensure skills are fresh and focused. One Chair of a 200 billion+ company told one of us he was rotating the HR consultant for Board search every two to three years, as “the advisor very soon starts playing his own game in board nominations”. Another chair recruited a famous investment bank solely to help with the mechanics of a successful 70 billion transaction but still used extensively the advice of a niche firm (fewer than 20 employees) with whom he had a trusted relationship.
Get and stay educated. Board work is evolving rapidly, and new best practices are being developed almost daily. Excellent governance has become a competitive advantage, and investors look at it more and more as a differentiator. It’s therefore essential for Chairs to stay current on the latest and best thinking on core topics.
Ensure there is a best-in-class support system. The Board secretary has become a discrete but essential asset for large organizations. Rigorous, efficient Board processes have become critical to organizational resilience. Despite their relative isolation, Chairs must not be tempted by the do-it-alone syndrome. While your team has now extended far beyond the staff (and even beyond the Board members), the secretary is an excellent anchor to have within.
Understanding and embracing the requisite leadership, making the right decisions about roles, and managing the transition well doesn’t guarantee that a CEO will move successfully to Chair. Not doing so, however, is a recipe for needless struggle and perhaps even derailment.