The role of the Chairman has become much higher in profile and the expectations have increased as, quite rightly, stakeholders now expect an engaged, energetic, and involved Chairman who does more than simply manage the corporate governance process.
The success of a Chairmanship undoubtedly hinges on the relationship the Chairman has with the chief executive, a relationship which should be centered on honesty, trust, and transparency. The success of this relationship is based on mutual understanding by both parties of the distinction between their two roles.
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Good and effective Chairmen must have an extremely good knowledge of the business they are chairing, they must know enough to ask the right questions, and must provide a constructive level of challenge to the chief executive. One of the main faults of chairmen deemed to be ineffective is their failure to comprehend that they are not there to run the business and that their role is instead to support and guide. In simple terms, the job of the chairman is to ensure that the business is well run and not to run the business.
There is, however, a fine line to walk between being too involved and being too remote. This means Chairmen should devote the appropriate level of time to their roles, which means visiting operations, talking with staff and customers, as well as investors.
The best Chairman is able to develop empathy with the business and engage with its people and issues. But there is no “one-size-fits-all” prescription for an effective Chairman.
The right level of engagement will vary depending on the company’s stage in the business cycle, competitive environment, and the experience of the chief executive.
What ultimately defines a good Chairman is the ability to run an effective board and to manage relationships with both shareholders and stakeholders.
What makes a good chairman:
- Charismatic personality.
- Good communicator and listener.
- Clear sense of direction.
- Strategic view – The Big Picture.
- Allow chief executives to get on with their job.
- Good at governance.
- Broad experience.
- Business acumen.
- Able to gain shareholders’ confidence.
- Able to get to the key issues quickly.
1. Charismatic personality
A good chairman is someone who can easily charm and inspire people. They should have the ability to energize a room and make people believe in their vision. They need to be able to capture people’s attention and get them excited about what they’re working on.
2. Good communicator and listener
A good chairman is a good communicator. They need to be able to articulate their vision and goals clearly, and they need to be able to listen to others’ ideas and feedback. They should be open to hearing other people’s opinions and be willing to make changes based on what they hear.
3. Clear sense of direction
A good chairman needs to have a clear sense of direction. They should know what they want to achieve and have a plan for how to get there. They should be able to set clear goals and priorities, and they should be able to communicate their vision to others clearly.
4. Strategic view – The Big Picture:
A good chairman should be able to see the big picture. They should be able to understand how their work fits into the larger picture and how it can impact other areas. They should be able to think strategically about their work and make decisions that will benefit the company as a whole.
5. Allow chief executives to get on with their job
A good chairman should not try to micro-manage the chief executive. They should allow the chief executive to run the company in their own way and only step in when necessary. The chairman should provide support and guidance, but they should not interfere with the day-to-day operations of the company.
6. Good at governance
A good chairman needs to be able to effectively govern the company. They should be able to make decisions that are in the best interest of the company and its shareholders. They should be aware of the different laws and regulations that apply to the company, and they should make sure that the company is compliant with all of them.
7. Broad experience
A good chairman should have a broad range of experience. They should have experience in business, finance, and law, and they should be familiar with the different aspects of running a company. They should also be familiar with the different industries that the company operates in, so they can make informed decisions about the future of the company.
8. Business acumen
A good chairman needs to have a strong understanding of business. They should know how to grow a company and drive sustainable growth. They should be able to spot opportunities and make decisions that will create value for the company.
9. Able to gain shareholders’ confidence
A good chairman needs to be able to gain the confidence of shareholders. They should be able to communicate their vision for the company and explain how they plan to achieve it. They should also be able to provide regular updates on the progress of the company and answer any questions that shareholders may have.
10. Able to get to the key issues quickly
A good chairman needs to be able to quickly identify the key issues facing the company. They should be able to sift through all of the information and find the most important issues that need to be addressed. They should then be able to develop a plan of action to address those issues.
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The Role of the Chairman in an initial public offering
The appointment of the right Chairman is key for a business wishing to IPO. The Chairman would greatly enhance the prospects of a successful IPO, by building an effective board and calling on their years of experience to ensure the story a company sells to the market is both compelling and real.
Further, it is the task for the Chairman to set the tone at the top and to say what they want the organization to be, establishing good governance and making sure the business has the right corporate reputation in its community.
In conclusion, a chairman has done their job when the “vision for the business”, as set out and presented in the strategic plan to shareholders and stakeholders, has been achieved.