What Makes a Good Chairman

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What Makes A Good Chairman?

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… Open Blog Post

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It should be clearly noted that in terms of the Companies Act, all Directors, Executive and Non-Executive Directors have a statutory duty to promote the success of the Company for the benefit of its members as a whole.

CHARACTERISTICS OF AN EFFECTIVE BOARD OF DIRECTORS WISHING TO DO AN IPO

• Well-functioning Boards of Directors are teams led by the Chairman.
• The Board of a public Company must be carefully selected and managed, taking into account group dynamics and the needs of the business.
• Succession planning is very important and a clear policy needs to be documented.
• A well refined Corporate strategy is most likely to be developed by a Board of Directors and delivered by an executive team, and encouraged by the Chairman, to work together for the benefit of all stakeholders.

CHAIRMAN ROLE

• The role of the Chairman has become much higher in profile and the expectations have increased as quite rightly, shareholders now expect an engaged, energetic, charismatic 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 CEO, a relationship which should be centered on honesty, trust and transparency. The success of the relationship is based on mutual understanding, by both parties of the distinction between their two roles.
• Effective Chairmen must have a good knowledge of the business to provide a constructive level of challenge to the CEO.
• Chairmen need to comprehend that they are not there to run the business. Their role is to support and guide. To ensure that the Business is well run but not to run the business.
• What ultimately defines a good Chairman is the ability to run an effective Board and to manage relationships with both shareholders and stakeholders.

CEO ROLE

• The role of the CEO is to run the day to day business of the Company.
• To communicate with the Chairman and the Board of Directors.
• To gain the confidence of the Board.
• To be responsible for ensuring that the Business Plan and Vision for the Company is achieved and that the business is well managed.

ARTICULATING STRATEGY OF THE COMPANY

• Each Director should be capable of articulating internally.
• The Company strategy and the manner in which it will be delivered.
• How the Corporate Governance structure facilitates decision making.
• Why the structure is appropriate for the Company.

BOARD EVALUATIONS

• The Chairman should work to maximise the effectiveness of each Board member for the benefit of the Company as a whole.
• Open and honest Board evaluation is an opportunity for the Board of Directors to improve its performance.

AN EFFECTIVE BOARD INFORMS AND ENGAGES WITH SHAREHOLDERS

• The Chairman must ensure that the Company has in place, effective lines of communications with all shareholders, institutional and individual.
• Communication must be dynamic, encouraging both discussion and feed back.

EFFECTIVE BOARDS HAS A BALANCE OF SKILLS

• The composition of the Board of Directors should demonstrate to its shareholders that it has the right mix of skills and experiences to deliver the strategy of the Company, for the benefit of the shareholders as a whole.

DIRECTORS INDEPENDENCE

• It may not be possible for SMEs to meet all the independence criteria.
• A Company should have at least two independent Non-Executive Directors and in a small Company, the Chairman may count as one of the independent Directors, provided he/she was independent at the time of his/her appointment.

INDEPENDENT AND MAJOR SHAREHOLDERS

• Directors who are or connected with a major shareholder is an issue of significant concern. Therefore, Boards including Directors associated with major shareholders should clearly explain to shareholders the reasons for them sitting on the Board.

COMPOSITION OF THE BOARD

A balanced Board of Directors of a listed Company would consist of:

• A Non-Executive Chairman
• Non-Executive Directors – usually two (one of whom may be the Chairman)
• Executive Directors
• Independent NEDs are important as they provide the appropriate oversight to deliver the strategy of the Company for the benefit of shareholders as a whole. Independence can be defined as independence of character and judgement, and being able to demonstrate this to shareholders in an objective manner.

The qualities required in my opinion:

• Good interpersonal skills
• Sound judgement
• Ability to influence
• Integrity
• The independence and conviction to say things that need saying when necessary

The NEDs usually chair and sit on the following committees

• Audit Committee
• Risk Committee
• Remuneration Committee
• Nominations Committee

CULTURE

The FRC recently came out with a report which looked at the increasing importance which Corporate culture plays in delivering long term business and economic success. The FRC believes that Company Boards:

• Should be connecting their purpose and strategy to culture
• Aligning values and incentives which support and encourage positive behaviours consistent with the Company’s purpose, values, strategy and business model
• Assessing, measuring and reporting on Company culture in annual financial statements.

Role Of The Non-Executive Director In Difficult Markets And Economic Uncertainty And What Keeps Him Awake At Night

1. My definition of a good Non-Executive Director is one that ensures that the business is well run but does not run the business.
2. Qualities which are needed to be a good NED:
   • Good interpersonal skills and ability to manage conflict
   • Sound judgment
   • The ability to influence through clear communication
   • Integrity
   • The conviction to say things that need saying and, as a last resort, to vote with your feet
   • To be commercially aware and to have board room experience!
3. Combined Code: The provisions of the Combined Code which sets out standards of good corporate governance, and the QCA Corporate Governance Guidelines, which assists in educating its members on best practice relating to NEDs – should be regarded as a benchmark for the standards required.
4. Other attributes and duties of a good NED:
   • The NED should be providing a helicopter view of the company and should not get entangled in the day-to-day operations.
   • He or she should be constantly challenging the MD and Executive Board by asking the apparently simple questions about the business.
   • Advise on strategy. A business without a strategy is a business without a direction or purpose.
5. In these difficult economic times and markets one reads of more fraudulent actions by companies and their executives and more hiding of price sensitive information etc.
6. For this reason NEDs should ensure more transparency with the executives, timely financial information and ensuring that internal control procedures are continually being reviewed.
7. Today, NEDs in the board room face an increasingly tough and challenging job.
8. New legislation under the Company’s Act has ratcheted up the threat of legal action. Activist shareholders are all too ready to put NEDs under fire. This has made the role of the NED even more crucial and onerous.
9. Also, the NED sits around the table on an equal footing and with the same legal obligations as those who run the company on a full time basis.
10. Therefore, in these difficult economic times the focus of the NEDs should be on the various risks facing the business.
11. There should be an emphasis on:
    • Internal controls
    • Cash management/receivables
    • Gearing of balance sheet
    • Ensuring bank covenants are not breached
    • Keeping customers and protecting markets
12. Non-financial risks should also be reviewed, e.g.:
    • Retaining key personnel
    • Litigation
    • Environmental
    • Health and Safety etc.
13. The NEDs should ensure that the Executive Team fully understands the issues of the day and that they are complying with the Board’s decisions at all times.
14. As they say you cannot beat experience and grey hair, as well as having the “scars and the T-shirt” and, hopefully, one can impart one’s experience of difficult times to the Management Teams.
15. You might know of Sir Digby Jones who was once head of the CBI. He was a Non-Executive Director of a company called I-Soft and was criticised years ago in the press. He said “We cannot be seen as Board Room policemen. NEDs can add value in so many ways but investigative policemen they are not”.
16. In my opinion there should be a balance of being a policeman – ensuring there is good corporate governance and adding commercial value to the enterprise.
17. However, no-one has yet come up with a better way of dealing with the fact that the owners of businesses – the shareholders – have to hand control over to professional managers. Therefore, if corporate governance fails, capitalism fails. We therefore need to make corporate governance work.
18. The Combined Code and Corporate Governance which sets out standards of good practice in relation to issues such as board composition, remuneration, accountability, relations with shareholders is seen in much of the world as the best model of corporate governance. The problem is not with the Code but the way it is applied.
19. Too often, people who should know better treat corporate governance as a matter of compliance with rules – but it is not. The banks that have run into trouble complied and got ticks in all the boxes – so what?
20. Good governance is a complex mix but in simple terms it is dependent on two main things-the first is Board Room behaviour – are the difficult questions being asked? Is there effective challenge or is there an over-dependence on the Management’s view?
21. The second, is making sure that the Board has a clear line of sight. If the Directors cannot see what is happening inside the business and are not getting good information, they will not know what questions to ask.
22. If the risk-management processes are not organised in a clear and methodical way then a handful of part-time non-executives do not stand much chance of overseeing them.
23. These two things, boardroom behaviour and connectedness to the organisation are inter-dependent. Therefore, there will be no real challenge for the Board Room unless the company makes it possible, which means that the Management needs to want it to happen.
24. In these difficult markets and economic times, I would like to share with you some of the concerns which keep me, as a Non-Executive Director, awake at night:
    • It is impossible for a NED to know everything about a company in an average of 26.5 days per year. The issue here is therefore how does one accelerate both industry and company knowledge?
    • As Chairman of the Audit Committee, the depth and detail of the Audit Committee Agenda and getting to grips with risk assessment is particularly challenging.
    • Geographic diversity and cultural differences in many companies gives one cause for concern.
    • Technology and security risks in today’s world is a worry.
    • Reputation risk – given that NEDs have to rely on others in the company and its control mechanisms, to keep matters under review, the fear of “what is not known” is an issue and a worry.
    • Legal proceedings against directors can result in reputational damage that can, in many cases, be irreparable. I always try to have a legal representative at Board level to advise all directors on issues as they arise.
25. There are many challenges therefore being a Non-Executive Director, especially in an economic downturn.

Although we should not be policemen, NEDs need to be more vigilant and clearly understand our fiduciary duties, and need to clearly identify major risks of the company on whose Board we serve.

Last Updated: March 04, 2026

The role of the Chairman has become much higher in profile than ever before. Stakeholders now expect an engaged, energetic, and involved Chairman who does far more than simply manage the corporate governance process. According to PwC’s 2025 Annual Corporate Directors Survey, 55% of directors believe at least one board colleague should be replaced — the highest proportion in the survey’s history — underscoring the growing demand for effective board leadership at the top.

The success of a Chairmanship undoubtedly hinges on the relationship the Chairman has with the chief executive, a relationship that 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 — the Chairman guides and oversees; the CEO executes and manages.

Good and effective Chairmen must have an extremely thorough 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 — 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, not to run the business themselves.

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 and other key stakeholders.

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, the experience of the chief executive, and — increasingly in 2025 — the complexity of challenges like digital transformation, cybersecurity risk, and evolving regulatory expectations.

What ultimately defines a good Chairman is the ability to run an effective board and to manage relationships with both shareholders and stakeholders.

10 Essential Qualities of a Good Chairman in 2026

• Charismatic personality
• Good communicator and listener
• Clear sense of direction
• Strategic view — The Big Picture
• Allows 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 inspire confidence and motivate people. They should have the ability to energize a boardroom and make directors, executives, and stakeholders believe in the company’s vision. This charisma extends beyond the board — a strong chairman can rally employees, reassure investors during turbulent times, and represent the company with credibility in public forums and investor meetings.

2. Good Communicator and Listener

A good chairman is first and foremost a good communicator — and an even better listener. They need to articulate the board’s vision and strategic priorities clearly, and they need to genuinely listen to the ideas, concerns, and feedback of directors, the CEO, management, and shareholders. Effective chairmen foster an environment where constructive dissent is welcomed and diverse viewpoints are heard before critical decisions are made. They should be open to challenge and willing to adapt their position based on the strength of the argument.

3. Clear Sense of Direction

A good chairman needs a clear sense of where the company should be heading. They should be able to set clear board priorities and governance objectives, ensuring that every board meeting is purposeful and focused on the issues that matter most. This means being disciplined about agendas, ensuring time is allocated to strategic discussion rather than just compliance updates, and keeping both the board and management aligned on the same long-term trajectory.

4. Strategic View — The Big Picture

A good chairman should be able to see the big picture — understanding how the company’s strategy fits within broader market trends, competitive dynamics, and macroeconomic forces. They should think strategically about the organization’s future, including emerging opportunities and threats, rather than getting drawn into operational details. In today’s business environment, this means understanding the impact of trends like AI adoption, geopolitical shifts, supply chain disruption, and changing consumer behavior on the company’s long-term position.

5. Allows Chief Executives to Get On With Their Job

A good chairman should not try to micro-manage the chief executive. They should allow the CEO to run the company and only step in when necessary — providing support, guidance, and constructive challenge, but not interfering with day-to-day operations. The chairman-CEO relationship is one of the most critical dynamics in any organization. CEO turnover remained elevated in 2025, and a notable number of departures were prompted by activist pressure. The best chairmen navigate this relationship by being a trusted sounding board for the CEO while holding them accountable for delivering results.

6. Good at Governance

A good chairman needs to be able to effectively govern the company. They should make decisions that are in the best interest of the company and its shareholders, be aware of relevant laws and regulations, and ensure full compliance. In 2025, governance expectations have expanded significantly. Boards must now oversee cybersecurity risk as a core governance priority — the SEC requires public companies to disclose material cybersecurity incidents within four business days and include cybersecurity governance details in annual reports. Effective chairmen also ensure robust board evaluation processes, successor planning, and alignment with evolving ESG frameworks and disclosure requirements.

7. Broad Experience

A good chairman should have a broad range of experience spanning business, finance, governance, and ideally, the specific industry the company operates in. They should be familiar with the different aspects of running a company — from financial reporting and risk management to talent strategy and digital transformation. Increasingly, boards also value chairmen with international experience, as global markets, cross-border regulations, and geopolitical factors play an ever-larger role in corporate strategy.

8. Business Acumen

A good chairman needs a strong understanding of business fundamentals. They should know how to evaluate growth opportunities, assess competitive positioning, and drive sustainable long-term growth. They should be able to spot risks and opportunities that others might miss, and make decisions that create lasting value for the company. This also means understanding the financial implications of strategic decisions and being able to constructively challenge management’s assumptions with data-driven reasoning.

9. Able to Gain Shareholders’ Confidence

A good chairman needs to be able to earn and maintain the confidence of shareholders. They should communicate the board’s vision, strategy, and governance practices transparently and answer difficult questions credibly. Regular, proactive engagement with major investors is essential — not just during AGMs, but through ongoing dialogue that demonstrates the board’s responsiveness to investor perspectives. As regulatory shifts continue to reshape the relationship between companies and shareholders, the chairman plays a critical role in navigating proxy season, responding to activist campaigns, and maintaining investor trust.

10. Able to Get to the Key Issues Quickly

A good chairman needs to quickly identify the most critical issues facing the company. They should be able to sift through complex information, cut through noise, and focus the board’s attention on the matters that require immediate action or strategic deliberation. This includes knowing when to convene the board on urgent matters — whether it’s a cybersecurity incident, an acquisition opportunity, a CEO succession issue, or a sudden market shift — and ensuring the board has the right information to make timely, well-informed decisions.

How Much Does a Chairman of the Board Earn?

Chairman compensation varies enormously depending on company size, whether the role is executive or non-executive, and whether the company is public or private. According to Spencer Stuart’s 2024 Director Compensation Snapshot, the average total compensation for S&P 500 independent directors is $327,092 — with independent board chairs receiving an additional premium ranging from $25,000 to $500,000 on top of that. Retainer levels for independent chairs at large-cap companies sit around $175,000, while small-cap independent chairs earn approximately $82,500.

For executive chairmen — those who also hold an active management role — compensation is significantly higher. Salary.com reports an average chairman salary of around $187,000, while Glassdoor puts it at approximately $269,000, with the 75th percentile reaching $366,000. Comparably reports an average of nearly $297,000. Private company boards compensate much more modestly — the median total compensation for a private company director was $40,000 in 2024, with the median chair premium at just $20,500.

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 greatly enhances 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 credible. Investors and underwriters look closely at board composition and governance quality when evaluating IPO readiness — a strong, experienced chairman signals that the company takes governance seriously.

Further, it is the chairman’s task to set the tone at the top: to articulate what they want the organization to be, establish robust governance frameworks, ensure compliance readiness for public company reporting requirements, and make sure the business has the right corporate reputation in its community and among potential investors.

Modern Challenges Every Chairman Must Navigate in 2026

Beyond the foundational qualities listed above, today’s chairmen face a governance landscape that is more complex and demanding than ever. Key challenges include:

• Cybersecurity oversight: The SEC now requires public companies to disclose material cybersecurity incidents and report on board-level cybersecurity governance in annual reports. Chairmen must ensure the board receives regular briefings on cyber risk and that clear lines of accountability exist between the CISO, management, and the board.
• AI governance: As artificial intelligence reshapes industries, boards are under increasing pressure to provide oversight of AI strategy, responsible deployment, and associated risks. Effective chairmen ensure the board has sufficient technology literacy to ask the right questions.
• Board diversity and refreshment: Stakeholders and regulators expect boards to reflect diverse perspectives. Chairmen must lead ongoing board evaluation and refreshment to ensure the right mix of skills, experience, and backgrounds.
• ESG and sustainability: While political dynamics around ESG have shifted, particularly in the U.S., the underlying expectations from institutional investors and global regulators remain strong. Chairmen must help the board navigate these complexities thoughtfully.
• CEO succession planning: CEO turnover remained elevated in 2025, with a notable number of departures driven by activist investors. Forward-thinking chairmen maintain robust succession plans well before they’re needed.

Qualities of a Good Chairman: Conclusion

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 — and when the governance framework that enabled that achievement is robust, transparent, and fit for purpose.

Finding the right chairman is one of the most important decisions any organization can make. Whether you’re preparing for an IPO, refreshing your board, or looking for a chairman who can navigate today’s complex governance challenges, CEO Worldwide can help. We specialize in international executive recruitment, placing top board-level and C-suite talent across 183 countries in as little as 7 to 10 days. Contact us to learn more about our C-suite recruitment services.