The New Year’s Resolutions the Chairman of the Board Should be Making for 2021

Good chairmen must consider how they and their board can continue to be successful and add value as we enter 2021, with the optimism that a new year brings, but with the pragmatism that’s required amid significant uncertainty. 

It’s time for clarity 

Role clarity is the foundation of an effective board and chairman. Good chairmen will consider the role that they play in helping the board add value to the business, the boundaries between the role of the chairman and that of the CEO, along with how each board member can better contribute to the work of the board.

Any uncertainty over roles, particularly in a highly volatile world, will not support successful decision making by the board.

Focus on the future

Boards have a clear oversight role, but sometimes too much time and energy are focused on past performance – what has happened and what cannot now be changed – rather than on the future.

Every chairman should refocus their board on future strategy. Look at how the company will achieve its purpose in a new year that will bring new risks, rewards and opportunities.

Therefore, make strategy live in the boardroom, not something that the board does for a day a year when they decide to be strategic on their “strategy away day”.

Challenge assumptions 

Clarity of purpose and a credible strategy are mission-critical for a successful business. Directors are charged with obtaining the best return for the risk being taken with the capital of the company, and strategy is how returns are delivered. The interplay between risk, strategy and return is often based on assumptions. The chairman is pivotal in leading a board where assumptions on these three elements can be challenged, to validate their relevance.

Emotional intelligence

In a challenging and increasingly virtual world, there’s a need for adaptable, agile leadership. This means it’s time to move from the traditional command and control style of chairman to a more facilitative leadership style – one that embodies emotional intelligence.

Emotional intelligence sees chairmen create and nurture a board culture of psychological safety, where bad news travels to the board more quickly than good news, where directors have the courage to constructively challenge and where it is fine not to have all the answers, particularly during these difficult times.

Ensure the board, CEO and chairman are fit for the future 

Effective chairmen focus on whether the board, the CEO and the top team have the capacity, capability and culture to deliver success for the organisation.

The start of a new calendar year is a logical time to review last year’s performance. This is more important in 2021 when many CEOs have been severely challenged during the pandemic.

The board only has one direct report – the CEO. The most important thing that a board must do is hire the right CEO. So, the most critical element of a good relationship between the CEO and the board is in establishing clear expectations on deliverables and ways of working together.

Informal “fireside chats” and ongoing feedback between the board and the CEO should ideally be complemented with a robust, repeatable annual review of the CEO to provide assurance, assessment and identify development needs. This needs to be driven by the chairman.

The start of a new calendar year is a logical time to review last year’s performance. This is more important in 2021 when many CEOs have been severely challenged during the pandemic. After all, 2020 has seen some CEOs demonstrate that they are “leading lights” while others have been revealed as “lite”.

The CEO review process should deliver a 360-degree view of their performance, involving the board, CEO and their direct reports, in surveys and interviews. A review can help the board clarify how to better help and support the current CEO but may also prompt the board to consider if a different CEO is now needed to ensure the organisation delivers on the business strategy.

Improve relationship with the CEO 

The relationship between the CEO and chairman is the most important one in the governance system. Success factors include honesty, candour and a relationship where the chairman and CEO are friendly but never ever seen as friends. Successful CEO and chairman relationships are built on trust and respect, and absolute role clarity. Smart chairmen consider how well this relationship is working and take the opportunity to recalibrate where required to ensure that the rapport is an asset to the board and the organisation.

Board composition  

It’s timely for chairmen to consider whether the board composition is fit for the future. Look at your board through the prism of the five drivers of diversity™- demographics, skills, experience, thinking styles and circles of influence, and consider how well your current line up matches up. True board diversity is broader than any one of the five drivers™ and delivers wider perspectives, improved decision making and outcomes.

Also, as the chairman of the board think about how you ensure all directors feel welcome wanted and valued. Diversity without inclusion is an illusion and will prevent you from gaining added value from board candidates that are not like you.

The good chairman will consider if they need additional training, mentoring, experience or development, to ensure what they bring to board leadership remains relevant and truly value-adding.

Be self-aware

Chairmen should take the time to honestly ask themselves if they are the right leader for the board in 2021. Questions they need to be asking include ‘are they leading the board in a way that’s adding value?’ And ‘is their approach enabling or constraining the work of the board?’.

The good chairman will consider if they need additional training, mentoring, experience or development, to ensure what they bring to board leadership remains relevant and truly value-adding.

Board and chairmen review processes can bring additional data and perspectives, but the really good chairmen are self-aware, reflect their own role and their performance and put in place a clear development and succession plan for themselves, the board and the CEO.

Proactive succession planning

It’s essential the chairman focuses the attention of the board on succession planning for the CEO, board members and themselves early in the new year. A succession plan is very important for the CEO because of their critical position at any organisation and the maintenance of business continuity. There’s always a big risk when recruiting a new CEO, so lessen this by having a succession plan in place and reviewing it every year to ensure the right leadership team is in place so the board can achieve its purpose. To deliver this the board must discuss and agree what they need from the next generation of leader. Once they know they can identify and mentor existing talent within the organisation, or identify, have conversations with and monitor external candidates the board deem suitable.

Make inductions work even better 

Chairmen must rethink induction programmes beyond a box of reading material delivered to the unfortunate new arrival. Enabling new board members to add value as early as possible involves a thorough induction and learning journey that will unfold over 18-24 months.

The induction process should include formal governance and company-specific governance training, organisation, customer and sector experiences, and an effective buddy system to complement the work of the chairman. The chairman must lead the induction programme and continuously improve the process based on objective feedback.

By making and actioning these resolutions for 2021, chairmen will preside over a highly effective board to which they add significant value.