We often get requests, usually from Chief Executives, about how to plan for a new Chair of the Board. Often the Articles of Association just say “The Directors/Trustees may appoint one of their number to be the Chair of the Directors/Trustees for such term of office as they determine and may at any time remove him or her from that office”, or worse still “The charity trustees may appoint one of their number to chair their meetings and may at any time revoke such appointment”. In the 21st century, chairing a Board is a big undertaking, and certainly involved a lot more than just chairing meetings! The task is best undertaken by someone with real understanding of modern boardroom roles.
What does the role involve?
According to the UK Corporate Governance Code, “The Chair leads the Board and is responsible for its overall effectiveness in directing the company. They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the Chair facilitates constructive board relations and the effective contribution of all Non-Executive Directors, and ensures that Directors receive accurate, timely and clear information”.
They need proven leadership ability, plenty of energy, and a strong commitment to the organisation they govern. They have to really want to lead the Board team, prepare for and follow up on Board meetings, line manage the Chief Executive (on behalf of the Board), and take the lead on annual review processes – for the Board, individual Board Members, and the Chief Executive.
Term of Office
The UK Corporate Governance Code states that one of the circumstances that is likely to impair, or could appear to impair, a Non-Executive Director’s independence is ‘has served on the Board for more than nine years’. These days, it is regarded as best practice for NEDs (particularly in the non-profit sector) to serve for a maximum term of 9 years. Beyond that, there is seen to be a challenge to them thinking independently enough to be of value to the Board.
Unless there is a very good reason to extend the term, 3 years is often enough for any Chair of the Board to serve in that role, particularly in the non-profit sector. There is an energy and commitment required to fulfil the role with the necessary purpose and enthusiasm, and to maintain the stamina needed to cope with any unexpected difficulties. If all is going well, there is nothing to prevent a Chair from serving for longer, but there is always a risk that everyone recognises the need for a fresh leader, except the current Chair!
The Succession Planning Process
Succession planning for the boardroom is a key task of the Nominations Committee. A strategic approach should be taken, including frequent thinking on:
- The strategic priorities and emerging risks to the organisation in the coming years
- The key tasks for the Board in leading and overseeing delivery of the strategy
- The skills, knowledge, perspectives, mindsets, networks needed by Board members to do those well
- The gaps, and emerging gaps, around the Board table
- The recruitment and development needs for the Board, included in the Governance Action Plan each year
That Committee should keep a record of when Board Members are due to stand down, and the Chair’s individual review conversations should inform the Committee about planning for people’s departure (eg) if they plan to stand down early for health or other reasons.
The Nominations Committee should also have a brief to do pre-Board thinking about key roles, and succession plans for them, including the Chair. They should bring ideas to the Board well before the current Chair is due to stand down, to enable a smooth transition from one Board leader to the next.
Where can we find a great Chair for the Board?
Often, the Chair of the Board is chosen from within the boardroom. It can always be useful to have a Vice Chair or Senior Independent Director in place, and it may be agreed by all involved that they are expected to become Chair after a certain number of years. If there is nobody with the right skills and mindset available, it may be necessary to run an open recruitment exercise, perhaps with the support of a suitable recruitment agency.
In the same way as the Board would if recruiting a Chief Executive, a Role Description and Person Specification for the Chair role should be agreed (with preparation by the Nominations Committee).
Need more information? Get in touch!