What Makes A Successful Board Chair?: Defining Their Attributes and Transition Preparedness

Leaders who can successfully navigate an increasingly unpredictable business environment are in high demand. Alongside the CEO, the non-executive chair is one of the most important and influential roles in an organization; one that can help drive the impact and future success of the business. In a sea of disruption brought on by globalization, climate change, mounting pressures from stakeholders, and technological and digital innovation, a board chair who can weather the storm becomes increasingly important, not least in the current upheaval caused by the global pandemic.

As the stakes for new chairs become higher, the traditionally sought backgrounds, experience and competencies may not be enough to guarantee success in the role. But there remains little consensus about what defines a successful chair. Are all chairs successful? If not, what are the benchmarks, behaviors or attributes that predict success? And what might an aspiring chair learn from those who are more experienced in the role?

In this context of uncertainty, we sought to shed light on the individual-level characteristics of those successfully performing in their roles as non-executive chairs of public companies. Our extensive global network of relationships with institutional and activist investors, pension fund managers and other corporate governance professionals provides us with a deep understanding of key themes influencing the board agenda and pressing issues facing chairs today. Drawing on that network, along with interviews of more than 40 European board chairs in the spring of 2020 and our experience working with hundreds of boards each year, we have synthesized what makes European public company chairs successful and the characteristics they have in common. From these, we have developed a simple model of behavioral characteristics and personal attributes that can help guide both experienced and aspiring chairs alike.

Our analysis shows that the characteristics that once satisfied the criteria of a successful chair have changed, and with them, so must the approach to chair appointments. The role of the chair has become increasingly important and boards, senior or lead independent directors and nominations committees across Europe should be continuously thinking about chair succession to ensure the board and organization’s long-term success. Globalization and digitization necessitate swifter responses to a broader range of stakeholder expectations. As ‘company ambassadors,’ chairs should be adequately equipped to meet these imperatives as efficiently and effectively as possible.

Although combined chair/CEO roles are often found in European companies, these roles differ from independent, non-executive chairs. Our research focuses on the attributes of non-executive chairs in public-listed European companies.

What chairs need to prioritize, as well as the expectations they face, have shifted markedly...Today, it is crucial that chairs can sufficiently meet a much broader range of expectations from a wider range of stakeholders, in a shorter space of time.

Role of the chair and the three most common chair challenges

The role of the chair is complex and multi-faceted. While the fundamental responsibilities of the chair have shifted little, what chairs need to prioritize, as well as the expectations they face, have shifted markedly. Traditionally, the role of the chair has involved managing the board, ensuring effective communications with shareholders, and working with and supporting the CEO on the shaping of strategy and its delivery. Chairs are often broadly described as facilitators and leaders - clear on direction, but open to being challenged. Today however, it is crucial that chairs can sufficiently meet a much broader range of expectations from a wider range of stakeholders, in a shorter space of time. This requires a high degree of awareness and agility.

“The best companies have agile leaders and a readiness to change quickly in the face of unforeseen scenarios. You have to act much faster than under normal circumstances; companies that do this best stand a much better chance of surviving and improving their competitive positions. The need for agility is here to stay.”
From Russell Reynolds Associates’ 2020 series of chair interviews

Whether experienced or inexperienced, incumbent or aspiring, there are certain challenges that almost every chair must tackle. Drawing on our experience, we have distilled these into three key categories – from the level of the individual, the immediate microenvironment, and finally the macroenvironment – that are of particular importance in today’s climate of constant change. Chairs who can effectively adapt and respond to these challenges are significantly better positioned to succeed in their role.

1. MANAGING THEIR LEADERSHIP STYLES
Research¹ has shown that CEOs are often characterized by strong egos, which are necessary to succeed at the top executive level. In contrast, non-executive chairs are typically expected to demonstrate a high degree of humility necessary to manage a board of peers. As many chairs have previously been CEOs or C-suite executives, the process of ‘ego management’ necessary to transition to the softer leadership styles most often employed by chairs is one of the biggest challenges a new chair might face.

“The ability to ‘flex’ between soft and hard leadership approaches is critical. ‘Soft' in being reassuring, calming, soothing, a rock to lean on, and ‘hard’ in making tough business decisions - for example, sticking to the core businesses for the future and abandoning the non-core activities and assets.”
From Russell Reynolds Associates’ 2020 series of chair interviews

2. ESTABLISHING A SOUND RELATIONSHIP WITH THE CEO & EXECUTIVE TEAM
The exact separation of responsibilities between chair and CEO can be ambiguous and differs according to the nature of the company challenges, the individuals and their specific relationship. In the context of continuous disruption, and as the agenda of the chair broadens, establishing a good working relationship between the chair and CEO and executive team is critical. Chairs should strive to be sufficiently available and engaged with the executive team, but at the same time find the delicate balance between being too remote and being too executive.

“One needs to make sure that the CEO and the management team maintain a good balance and build strong bonds between them that welcomes challenge in all directions. Trust and teamwork follow. Chairs should also take the lead in taking an even longer-term view on the business in order to challenge the CEO on the key issues for the future.”
From Russell Reynolds Associates’ 2020 series of chair interviews

3. ALIGNING (WITH) DIVERSE STAKEHOLDERS
Public-listed company chairs find themselves in a unique position at the interface between the board, executives, shareholders (in the case of one-tiered boards) and an ever-broadening array of other stakeholders including governments, regulators, employees and other special interest groups such as NGOs. Companies increasingly face pressures from stakeholders to proactively demonstrate active agendas around sustainability, corporate purpose, and social responsibility. Chairs are arguably best positioned to act as one of the key ambassadors of the company and align expectations and strategy. As the extent and rate of change of stakeholder expectations grow, however, agile management that takes all stakeholders into account may prove increasingly challenging.

What kind of chair is best suited to overcome these challenges?
Job specifications for chairs often place emphasis on background and experience – and for good reason. Appetites for riskier, less proven chair appointments tend to drop in times of uncertainty. We recently conducted an analysis of 236 independent non-executive chairs of public companies listed across several major European indices². Of these, 63 percent have prior experience as a public-listed company non-executive chair, 49 percent have experience as the CEO of a public company, and 15 percent had experience as a CFO of a public company. Of those that did not have either CEO or CFO experience, all had at least some form of C-suite experience in a public listed company.

However, as the stakes for new chairs become progressively higher, traditional backgrounds, experience and competencies may not be enough to guarantee that a chair will be successful in their role. A deeper consideration of attributes and behaviors is also needed. As the environment and importance of the role evolves, so must the approach to chair appointments. Our experience in working with public-listed company chairs across sectors in Europe has given us valuable insights into the critical individual-level characteristics that help successful chairs
overcome challenges and succeed in their role.

Critical Behavioral Characteristics of a Successful Chair
Our research suggests that successful chairs are typically distinguished by a set of six critical behavioral characteristics, repeated actions that can be learned and developed over time and through experience. Behavior alone, however, will not ensure a successful chair. The most successful chairs are those who also possess a unique set of key personality traits such as curiosity, agility, inclusivity, and resilience that enable the subtle psychological wherewithal necessary to succeed in the role. These tend to be more difficult to develop, attributed to an individual’s personality, rather than experience, but are crucial drivers of behavior that can ensure success in a context of constant change. These six critical behavioral characteristics and associated personality traits are as follows :

Curiosity and Agility to Support Foresight and Insight
As a steward for the long-term health of a business, a chair should seek to take on a macro-perspective that appreciates the complexity of the broader socio-political context surrounding the business. Being armed with a persistently curious outlook and keen awareness of activity outside of the immediate environment will likely drive success. Given the extent of rapid change in the business environment, successful chairs will be agile, continually reinventing themselves by remaining receptive to new ideas, solutions and processes. They will be proactively thinking about the composition of their board to respond to new challenges and re-assessing their strategic scenario planning to manage risk and seize new opportunities.

“This is a great moment to position the company more prominently in terms of ESG, and many companies who are not fighting to survive are looking actively at how best to do this.”
From Russell Reynolds Associates’ 2020 series of chair interviews

Relationship-building to Raise Social Connectivity
A chair’s social network is an asset that can yield a wealth of invaluable outside perspectives and advice, if leveraged appropriately. The greater the extent of the chair’s social engagement, the greater the potential benefit – not only to the chair themselves but for the broader business. The transition from executive to chair, including the ability to ask the right questions and fully engage in a process of continual learning, takes humility. Some of the most successful chairs tend to surround themselves with experienced and knowledgeable individuals and are comfortable seeking advice where needed.

Inclusivity to Enhance Board Orchestration
A chair’s job is to bring out the best of the board, leveraging each member’s unique strengths, knowledge, and expertise, and understanding the combination of these that produces the most effective notes. The chair should also be able to recognize gaps in the board’s composition and respond accordingly. It is a given that the chair is expected to be inclusive; to stimulate healthy, constructive debate amongst the board and should have the ability to instill confidence and to cultivate a climate of trust. But chairs also need to find the delicate balance between healthy debate and consensus. Ideally, the chair will let everyone in the room contribute to relevant matters, without making people feel like they are being ‘pushed’ in a certain direction.

“Highly functional boards have cultures that win. They are agile and more enabling.”
From Russell Reynolds Associates’ 2020 series of chair interviews

Resilience to Support Being Truly Purpose-driven
A chair should always be purpose driven, but the truly successful behavior lies in the ability to ‘walk the talk’ - to tie the mission and vision of the organization to corporate strategy and culture, and crucially, to translate them into action. Resilience is a key driver of purpose-driven behaviors, especially in the face of change. Steering an organization towards the future needs a long-term perspective that eschews ‘quick wins’ in favor of careful, but suitably flexible, long-term plans.

Gravitas to Reinforce on Stakeholder Engagement
Navigating and managing a myriad of different stakeholders requires a combination of relevant knowledge, experience and understanding. Chairs that have ‘social antennae’ well-attuned to media, business and public sentiment and can customize their approach are most likely to succeed in this arena. Engaging with high-level executives, shareholders, governmental and regulatory stakeholders requires a strong gravitas – a sense of authority and the ability to command respect as an effective ambassador who can deftly articulate the organizational view.

“A chair should be the rock to lean on. They should be authentic, secure and exude stability, being well-grounded in stormy weather. It is in crises that true leadership is needed.”
From Russell Reynolds Associates’ 2020 series of chair interviews

Commercial Orientation to Strengthen Business Judgment
Successful chairs will typically demonstrate a deep understanding of business fundamentals, have strategic mindsets and a proclivity to focus these skills and knowledge on decisions and actions that will be in the best commercial interests of the business. At the same time, they are able to balance these with wider purpose-driven imperatives.

“It is absolutely crucial to be able to work with ambiguity, to think in terms of scenarios and options, and to do so quite analytically, evaluating opportunities and risks quantitatively, and keeping the bigger picture in mind.”
From Russell Reynolds Associates’ 2020 series of chair interviews

Our recommendations
No chair can be the perfect archetype. But all chairs should seek to develop the right balance of behavioral characteristics and personal attributes and employ and adapt them as needed to best suit their specific role, sector or organization. Boards and nominating committees should carefully consider the critical behavioral characteristics that define successful chairs.

• Does the incumbent chair demonstrate these critical behavioral characteristics?

• Do the internal future chair candidates possess the psychological attributes that support these behaviors?

• How are these behaviors best aligned to organizational strategy and culture?

The ability of an organization to adapt in the face of constant, exponential change and disruption hinges on the capabilities of its leaders. At the intersection of the executive team, shareholders and the board, the chair is uniquely positioned to align stakeholder expectations with strategy and performance of the organization. In this context, truly successful chairs are prepared; they are armed with knowledge, a deep understanding of the role and the means to continuously improve their own performance along with that of the business.

Successful chairs typically demonstrate a set of key behavioral characteristics that revolve around purpose, stakeholder engagement, business judgement, social connectivity and a combination of foresight and insight. But complementing these with a balance of personality traits such as curiosity, humility, inclusivity, agility, gravitas and resilience makes for the blueprint of a chair that can successfully steer an organization through the storm, no matter the challenges it presents.

1. Hogan, Robert & Sherman, Ryne (2018), Hogan Assessments: Self-Deception and Leadership, https://www.hoganassessments.com/selfdeception-and-leadership/. De Vries, Kets (2015), Instead Knowledge: Humble Narcissists Make GreatLeaders: https://knowledge.insead.edu/leadership-organisations/humble-narcissists-make-great-leaders-4193

2. Analysis of incumbent chairs from 236 companies listed on FTSE 100, CAC 40, DAX, SMI, OMX Helsinki, OMX Stockholm, OBX, IBEX and SMI. Data sourced from BoardEx, August 2020

WITH THANKS TO
HARM VAN ESCH, Amsterdam
FIONA KNIGHT, London
KERYNNE METHERELL, London
LUKE MEYNELL, London
MICHA ROSENTHAL, Stockholm
ISABEL ROUSSEAU-CALISTI, Paris
ASAF RUBIN, London
MARC SANGLE-FERRIERE, Paris
SUSANNE SUHONEN, London