What are the New Year’s Resolutions the Chairman of the Board Should be Making for 2022?

As we enter 2022, chairmen need to contemplate how they and their board can continue to be successful and add value in a world that may continue to be uncertain and unpredictable. While it’s important to be optimistic about the future, pragmatism is required due to the continuing fallout from the COVID crisis.

Ensure role clarity

Role clarity is the foundation of an effective board and is something the chairman needs to engender. Ambiguity and confusion over roles on the board, particularly in an unpredictable world, will have a negative impact on board effectiveness and decision making. Good boards understand where their role ends and the role of management begins, they recognise that role confusion is a recipe for an ineffective board.

It’s good chairmen that clearly understand their role in helping the board add value to the organisation, the demarcation of responsibilities between themselves and the CEO, and ensure each director is clear on their role in contributing to the work of the board.

Purposeful chairmen have clarity about the value they add in leading the board. They have board composition, work plans and calendars which reflect this value delivery, and a culture that regularly assesses board, CEO and individual director performance in stewardship of the agreed value creation.

It’s good chairmen that clearly understand their role in helping the board add value to the organisation, the demarcation of responsibilities between themselves and the CEO, and ensure each director is clear on their role in contributing to the work of the board.

Agile boards ready for the future

The chairman must understand the importance of agile and adaptable boards as the COVID crisis starts to abate. What worked well during the health emergency might not work so well now. Therefore, they need to ensure the board is adaptable and agile as their business navigates its way through the uncertainty, volatility and complexity that will be faced moving forward.

Productivity/risk planning

Remaining productive will be a key focus for businesses in 2022. It is up to the chairman to direct the board to focus on issues impacting productivity, such as the supply chain and staffing, for example, to safeguard the organisation.

As part of this, the chair must ensure that the board has a clear and aligned appetite for risk based on a robust understanding of the risks to the business – something they must consider as part of their strategy and business planning. It’s also up to the chair to engender a culture of openness, to challenge assumptions around risk, to make sure the board is well-positioned to spot and, where possible, turn any future risk to their commercial advantage.

Environmental, social, governance (ESG)

ESG is on the radar of many boards, particularly with COP26 fresh in the mind. Today, ESG is a business imperative with almost all stakeholders recognising its importance. If they have not taken ESG seriously to date, now is the time for boards to do so.

The chair has a key role to lead the board to focus on ensuring that ESG policies are fit for purpose and that the implications of heightened awareness and responsibility for ESG are understood by the board and CEO.

Emotional intelligence

Effective board leadership today demands an ability to put ego to one side and make it easy for the board to be effective by being a true facilitator- an emotionally intelligent and enabling leader of the board. The “command and control” style of old is now history in an increasingly challenging and virtual world.

Successful chairmen in 2022 will generate trust, build engagement, provide leadership and discipline to their boards, yet embody empathy to create and nurture a board culture of psychological safety. This allows bad news to travel to the board faster than good, empowers directors to have the courage to constructively challenge, and is one where it is fine not to have all the answers, particularly during these uncertain times.

Strong relationship with the CEO  

The most important relationship in the governance system is between the chairman and the CEO because it has a huge impact on the performance of the company. The foundation of this relationship is role clarity that the chair is the leader of the board, and the CEO is the leader of the business. To be a value-adding relationship it needs to be one built on trust and respect, where there’s candour and honesty on both sides.

In 2022, the chair needs to factor in the health of their relationship and recalibrate it where required to ensure that the rapport is an asset to the board and the organisation.

Board diversity 

The beginning of a new year is a good time for the chairman to take a step back and consider whether their board composition is fit for the future. They should look at the board through the prism of the five drivers of diversity™- demographics, skills, experience, thinking styles and circles of influence, and consider how well it matches up. True board diversity is broader than any one of the five drivers™ and delivers wider perspectives, improved decision making and outcomes.

The pace of technological change and its impact on business demands that boards have access to skills and practical experience to help them understand the opportunities and implications of digitalisation and cybersecurity to businesses.

Lead the review of the CEO, board and chairman

The start of the new year provides a good opportunity to review all those on the board; something that might not have taken place for a couple of years because of the pressure on the top team caused by the health emergency.

Chairmen must take responsibility to ensure that they, the board and the CEO are ‘fit for the future’. They always need to be asking, does the board have the composition, leadership, capability, capacity and culture to deliver success for the organisation? This requires them to take the lead in the areas of reviews, succession planning processes and recruitment to the board.

All on the board derive substantial benefit from a structured and systematic performance review with clear accountability and follow up. Also, such an assessment might prompt the board to consider if a different director is now needed to improve effective decision making and help drive business success.

The chair needs self-awareness

Chairmen must have self-awareness. They need to be honest and ask themselves if they are the appropriate leader for the board today and in the future. They need to answer key questions, such as: “Are they leading the board in a way that’s adding value?” And “is their approach enabling or constraining the work of the board?”.

Chairmen must seriously consider if they require additional training, mentoring, experience or development. Only then can they ensure what they bring to board leadership remains relevant and truly value-adding.

Succession planning for the CEO and themselves 

It’s an effective chair that takes succession planning for the CEO and themselves seriously, particularly in the current challenging business environment. The board must prepare for all eventualities from unexpected departures, such as due to illness; or not being up to the task in hand post an annual review of their performance; through to the dates they can plan for, such as reaching retirement age.

The unexpected departure of the CEO, for example, could be very damaging to the organisation. Also, there’s always a certain amount of risk when recruiting a new CEO, which is why the chair should use the start of the year as an opportunity to task the board to either create or re-visit the succession plan to help maintain business continuity.

Effective induction process 

The only way new directors can make a valuable contribution to the board as quickly as possible is by bringing the onboarding process into the 21^st century.

It’s the responsibility of the chairman to take the lead in this by helping to devise and ensure the implementation of a bespoke 18–24-month “journey of learning”, which includes governance training and a buddy system.

Gone are the days of dumping a pile of reading material on a new director and expecting them to hit the ground running.

The chair must also continuously strive to improve the induction process based on objective feedback.

Those chairmen who want to preside over a highly effective board to which they add significant value in 2022 must recognise these factors and make them their resolutions for the new year.