June 2010                                                                                              Issue 3

BoardWorks International

 

 
 
 
 


Top Board Leadership- Opportunities for Improvement in Chair Performance
 
Chair personHaving an effective board chair is a fundamental prerequisite for having a fully functioning board. A recent research study has pointed to areas where performance improvements seem likely to be needed. (1)
 
The research was based on responses from nearly 800 board members who evaluated the effectiveness of Australian and New Zealand board chairs in relation to a range of eight different performance standards. (2) The study found that most boards gave their board chairs relatively high marks in the following areas:
 
  • having a constructive working relationship with their chief executive (79% favourable);
  • having an effective personal leadership style (78%);
  • conducting an effective decision-making process (72%); and
  • ensuring the board's workload is dealt with effectively (64%).

Unfortunately, among the sample boards, their chairs disappointed on the remaining tests.  These were in the areas of:
 
  • Chief executive performance appraisal (43%);
  • documentation of the Chair's role (39%); and
  • measuring chair (16%) and committee chair (10%) effectiveness. 

Opportunities for improvement
 
1.      Chief Executive Performance Appraisal
 
That only 43% of directors indicated satisfaction that the performance appraisal of the CEO is handled well in their organisations is not surprising. An even larger sample may have reduced this number still further.  Too many chief executives also report that this vital process is poorly conceived and conducted.  Most chief executives are looking for and respond well to an open, constructive and thorough (i.e. more broadly conceived) performance management process.  It can be argued that the chair should not lead the performance appraisal aspect of the process.  However, the chair, as the person with the overall responsibility for board effectiveness, should nevertheless ensure that the process is well designed and is conducted fairly and with integrity. (3)
 
2.      Documentation of the Chair's role 
 
The role of board chair is arguably the most important in boardroom performance.  It is important, therefore, that there is clarity about the chair's role and responsibilities.  Appropriate documentation is an essential aid in selection, evaluation and ongoing professional development.  It is also important to ensure that the chair's role is well calibrated with the roles of directors and, where committees exist, with the role of committee chairs.  In the absence of such documentation it can be extremely difficult to address issues of under-performance in the chair's role.
 
3.      Measuring chair and committee chair effectiveness.
 
A conclusion that the measurement of chair and committee chair effectiveness is not up to scratch is also not a great surprise.  Systematic board and director evaluation is still far from universal.  Often such evaluation processes, where they exist, do not extend beyond the board as a whole.  However, like regular and formal assessments of the effectiveness of the board, this process extended to the board chair and the committee chairs (and indeed to directors generally) can be a valuable and acceptable catalyst for improvement. 
 
In addition to a comprehensive assessment process, the research report points to wider opportunities for board committee performance improvement including:
 
-         ensuring there is a clear charter for each committee
-         developing a clear statement of roles and responsibilities for each committee chair
 
The changing of the guard?  
 
Interestingly, the research also indicated that the directors under 45 years of age who participated in the survey were consistently more critical of chair leadership processes than those aged over 64.  This may be a promising sign that younger, upcoming directors are expecting higher standards of boardroom performance than may have been acceptable in the past.
 
 
(1) Chair leadership: An inside look at how well board chairs perform. Insync Surveys in conjunction with Board Benchmarking, May 2010.  Download the full report from www.insyncsurveys.com.au 
 
(2) The research was based on the views of 778 directors who sit on 92 different Australian and New Zealand boards (of commercial, governmental and not-for-profit organisations).
 
(3) Given the importance of this topic it is something that we will address more thoroughly in the next issue of Board Works.
  

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BoardWorks International is a specialist governance effectiveness consultancy dedicated to assisting governing boards to provide effective strategic leadership to their enterprises and to fulfil their fiduciary and stewardship responsibilities to their stakeholders. It is also our aim to make 'board work' a satisfying and enjoyable experience for all who serve on or provide support to, governing boards.