The role of the chair and how an NED can help

The FRC suggests in its guidance on board effectiveness that:

‘The chair is pivotal in creating the conditions for overall board and individual director effectiveness, setting clear expectations concerning the style and tone of board discussions, ensuring the board has effective decision-making processes and applies sufficient challenge to major proposals. It is up to the chair to make certain that all directors are aware of their responsibilities and to hold meetings with the non-executive directors without the executives present in order to facilitate a full and frank airing of views.’

It also notes that the primary purpose of the guidance itself is to stimulate boards’ thinking on how they can carry out their role.

Taking on his challenge, the IDT team recently discussed the topic of the role of the chair, bringing their combined experience of individually acting as a chair in a multitude of companies and sectors, from large to small. As you would expect, the discussion was wide-ranging, so here we pick up on the 3 Ts of that discussion:

• Timing
• Tone
• Talent

The aim is to share our experience, provide a few tips on best practice and conclude with some specifics on the role of the NED.

Timing

One of the roles of a chair is to ensure that there is a good workable agenda. Let’s consider other key elements of the role and consider the impact of a NED.

Keeping to that agenda is the most fundamental task of any Chairman. A good agenda has purpose and a timeline. Without control to a timeline and without direction a board meeting can ramble on for hours and achieve little. Chairing a meeting is not a popularity contest, there will be times when to meet the dual requirements of time and purpose a discussion needs to be curtailed. A good chairman will intervene politely but efficiently and suggest that the discussion is taken off-line.

Whether you are a new chair, or you are an experienced chair, there will always be the element of the iron hand in the velvet glove. You must listen, you must allow people to talk, you must stop people talking too much, you must keep the board meeting moving.

IDT tip : have a large clock visible to all board members at all times. Add timings to your agenda to indicate which agenda items are expected to have most time allotted to them.

Many different qualities will need to be displayed by the Chair – good team leadership, empathy, tact, strategic thinker, able to manage the corporate governance process, facilitator of Board debates, financial acumen, amongst others - and in particular, the Chair needs to be a perceptive reader of people.

Tone

The chairman sets the tone of the meeting from the outset. The FRC guidance notes that the role of the chair includes shaping the culture in the boardroom. Is it consultative and collegiate? Dictatorial and aggressive? Noting that different tones may be require for different meetings. The Covid pandemic has surely changed the dynamics in your board meetings.

Practically, the chair should not allow meandering and rambling. A good chair vocalises their intentions and the purpose of the meeting, they make it clear to fellow board members and attendees how they intend to manage the meeting. They publicly note that all attendees should have a voice They note that they may cut short contributions if they go off topic or are too lengthy without the ability for others to contribute.

IDT tip : As chair, have a few phrases that are natural to you that you can use to curtail excesses contributions by one individual, or topics that are overrunning their allotted time. ‘What are your thoughts?’ ‘Let’s take this topic outside of this meeting for further discussion’ ‘All good points made, does anybody have a different view.’

It is also okay for attendees to not to agree. A good chair will be aware of this and will ensure they all views are contributed to the meeting. Lively discussion through the sharing of divergent views can make the board more effective and stronger. But equally a good chair will not allow dissent with no outcome, personal comments or heightened emotions. They should be able to calm down situations, move them external to the meeting or move the topic on if no resolution is likely to be found.

Equally board members do not have to like each other, but they do have to have respect for each others opinions and contributions, especially if they are different to their own. A good chair will ensure that the breadth of opinions is shared and will not solely encourage repetition of their owns views. As the FRC states a chair should see their role as: ‘fostering relationships based on trust, mutual respect and open communication – both in and outside the boardroom – between non-executive directors and the executive team’.

A Chair needs many different qualities, and these are not all in the IQ box. A Chair needs a high level of emotional intelligence to enable them to navigate relationships, support those less confident in the meeting to contribute, quickly read the mood of the meeting, call out the elephants in the room, give the popular and unpopular feedback and be aware of the impact of decisions on those around the table.

Talent

By talent, we mean the attendees and contributors to the board meeting and the talents that they can bring to discussions and decisions.

As we’ve noted, a board meeting needs inputs and robust discussion. This can only be achieved through having a board with differing views, experience, attributes and knowledge … by default a diverse board. This diversity and difference is invaluable in the decision making of a board and setting a strategy for a company. If a board is staid, static and similar in all its components, its ability to adapt, grow, and progress will be severely hampered

Another key role of the chairman is to get these diverse board members to contribute, to get individuals to showcase their talent. The right level of engagement by the Chair will of course vary from company to company but a good chair engenders an atmosphere of openness and collaboration with the aim of moving the discussion and the company forward.

IDT tip : as chair, speak with other board members outside of the meeting schedule to understand their drivers and which topics they have most to contribute to. Agree with them before each meeting, especially in the case of new board members or those with limited board experience, that you will be calling on them to contribute on specific agenda items so that they can prepare their thoughts ahead of the meeting.

One important role of the chair, as noted by the FRC is ‘to provide guidance and mentoring to new directors as appropriate’. This can be done both within the meeting, drawing new members into discussion on those topics most relevant to them, and outside the meeting through understanding their expertise, drivers and concerns and supporting their growth within the role. A successful chair should be seen as one that nurtures a board with full contribution, that engages with all attendees, and draws out diverse contributions … not one that rules based solely on their own knowledge and experience.

As one of the IDT team noted ‘the chair needs to enable people 'to feel valued and included', it's not just about finishing on time.’

The role of the NED

What is the role of the non-executive director in relation to chairing meetings?

The NED acts as the interface between, for example, board members who do not feel they are getting their opportunity to talk and the chairman keen to get through the business at hand. The NED encourages participation both by showcasing through their own contribution, but also by nurturing and encouraging the contribution of others in support of the chair a discussion by the board in general.

An experienced non-executive director with board experience can bring good advice and help focus the board, the chairman and the chief executive officer. These skills require the NED to fully understand the culture of the company. Through a process of “Listening”, “Challenging” and “Supporting” the board, the NED can act as a bridge with the Chair to bring people together. By doing this they not only share their own expertise, but also ensure that the expertise of all other attendees is shared.

In a smaller organisation, an NED can support the chair in driving outcomes to meetings, supporting positively during meetings, leading discussions, reinforcing messaging and keeping focus on the target outcomes of each meeting. By sitting alongside a chair, they can enable a chair with such a broad range of focus areas to delegate both tangible actions and soft skills engagement. They can pick up and communicate unspoken messaging in the meeting that the chair, juggling all their roles and responsibilities, may not pick up on.

With a collaborative working relationship, the chair and a NED can create a powerful combination. A combination that can be strengthened by their combined strengths but does not detract from the ability of each to have independent views and contributions, which may also be contrary to each other. Their interaction can epitomise a collegiate working relationship with disparate views underpinned by mutual trust and respect.

Can a NED chair a meeting?

A non-executive director may be asked to chair board meetings, either as an occasional substitute or permanently appointed to the role. The suggestions around the agenda preparation, contents, roles and responsibilities still apply.

For the NED, preparation is even more important , detached from the day to day activities, they rely on board papers and communications with other board members.

If the NED is chairing a board with the CEO present, they may have a dual role. They have a responsibility to ensure the board meeting has purpose, has outcomes and actions and is finished in a timely manner, but may also act as the bridge between the CEO and other board members. A good working relationship between the NED and the CEO, both inside and outside the boardroom, is therefore highly important to enable effective board meetings.

What if you are an executive director and the chairman? IDT would recommend that in these cases the agenda is structured to allow you to effectively chair the meeting whilst also contributing. If there are agenda items at which your contribution will be necessary and important, we recommend that you appoint a vice chairman with less input into the matter to run that part of the meeting. This achieves two things. It makes it clear to the board that when you are acting as a chairman that is all you are doing. It gives chair experience to other board members and improved understanding of your role and empathy for you.

It is clear from our discussions that the right level of engagement by the Chair will vary from company to company. Many different qualities need to be exercised by the chair of a meeting and, in particular, they need to be a perceptive reader of people and circumstance. With such a broad range of qualities needed within one role, having an NED by their side is invaluable for any chair, if only to be able to share the practicalities and have a trusted confidante in the room.

If you are looking to appoint a chair to get the best out of your meetings, or are a chair yourself and would benefit from having an experienced NED by your side, contact IDT for a confidential chat at info@directorsandtrustees.co.uk

Independent Directors and Trustees is a collective of experienced UK resident directors and trustees who share their knowledge and experience amongst themselves for personal development and the benefit of the boards on which they are appointed www.independentdirectorsandtrustees.co.uk