Boardroom

The chair is accountable to the board for the performance of his/her role. The chair also has an important role in:

  • representing the board in its accountability to members and shareholders including at and between member and shareholder meetings;
  • cooperating with the CEO, representing the public face of the organisation to its broader stakeholders and the community

The role and basis of appointment of the chair is commonly set out in the organisation’s constitution or in its governance or board charter.

Boards often also appoint deputy chairs to cover for the chair when absent or otherwise indisposed.

There is scant legislative or regulatory recognition of the position of a chair. The role and basis of appointment of a chair is usually found in the organisation’s constitution or in its governance or board charter.

Usually chairs are elected to office by their fellow board members although the constitution of some organisations may provide otherwise:

  • In the NFP/community sector, chairs are sometimes elected directly by the members of the organisation
  • In public or governance organisations, chairs are often appointed directly by the responsible Minister of Government.
“ The role and basis of appointment of the chair is commonly set out in the organisation’s constitution or in its governance or board charter. Boards often also appoint deputy chairs to cover for the chair when absent or otherwise indisposed”

A sample general description of the role and responsibilities of a chair and deputy chair that might be found in a governance or board charter:

Chair

(a) The chair is responsible for leadership of the board including:

  • Facilitating proper information flow to the board;
  • Facilitating the effective functioning of the board including managing the conduct, frequency and length of board meetings;
  • Communicating the views of the board, in conjunction with the CEO, to the organisation’s members, security holders, broader stakeholders and to the public.

(b) In performing his/her role, the chair’s responsibilities also include:

  • In consultation with the CEO/company secretary:
    • Setting the agenda for the matters to be considered by the board;
    • Seeking to ensure that the information provided to the board is relevant, accurate, timely and sufficient to keep the board appropriately informed of the performance, finances, affairs, opportunities and challenges of the organisation, and of any developments that may have a material impact on it;
    • Seeking to ensure that communications with stakeholders, regulators and the public are timely accurate and relevant;
  • Facilitating open and constructive communications amongst board members and encouraging their contribution to board deliberations;
  • Overseeing and facilitating board, committee, board member and CEO evaluation reviews and succession planning;
  • Liaising and interfacing with the CEO as the primary contact between the board and management;
  • Liaising with and counselling, as appropriate, board members.

(c) Subject to the terms of the constitution, the chair is appointed by the board from amongst its members and holds office at the discretion of the board until removed from office by the board or until the chair resigns from office or is no longer a board member.

(d) In the absence of the chair, the deputy chair (if there is one appointed by the board) or the senior or lead independent director, should assume the role that otherwise would be performed by the chair if the chair was not absent.

(e) Desirably the chair should be non-executive and independent and the roles of the chair and the CEO should not be exercised by the same person, except in special circumstances approved of by the board.

Deputy Chair (or senior independent Director if a deputy chair is not formally appointed)

(a) The deputy chair (if one is appointed), or the senior independent director if a deputy chair is not formally appointed, has the following responsibilities:

  • To perform the role and functions of the chair in the absence of the chair for any reason;
  • To be available to facilitate the following matters when and as appropriate and required:
    • chair succession planning;
    • approvals and actions required to be performed by the chair where the chair actually or potentially may be compromised due to personal or other conflict of interest;
  • At the request of the chair, to support the chair in the performance of the role and function of the chair.

(b) Desirably, the deputy chair should be an independent non-executive board member and should not also be the CEO.

Process of appointment

Unless the organisation’s constitution otherwise provides (refer above) chairs are usually elected from amongst the cohort of board members.

Assuming the board has pursued sound succession planning processes for the position of chair, commonly the deputy chair or another board member with appropriate skills and attributes will succeed a retiring chair with the support of the other board members.

When this is not possible it may be necessary for the board to seek to recruit a new board member, perhaps to fill a casual vacancy arising from the retirement of the chair, but with the express expectation of that new board member then being elected by the board to assume the role of chair. Due to the importance of the role of chair, special care will then be needed in the recruitment and selection process of that person.

Aspects to be considered in electing a chair

Generally

Boards should ensure the selection process considers the key aspects of the role of chair and any prospective candidate’s ability to meet them. These include:

  • Maintaining an effective working relationship with the CEO;
  • Expected time commitment required by the role, including preparing for and participating in board meetings, board committee meetings, board/director/ CEO evaluations, preparing for and participating in member/shareholder meetings, acting as spokesperson for the board and the organisation (as appropriate in co-operation with the CEO), regular meetings with the CEO and other senior executive officers, and representing the organisation at industry and community gatherings;
  • Balancing the numerous personal traits required of an effective chair including tact and diplomacy, the ability to reconcile opposing views and the power to influence.

Business related competencies expected of chairs

  • Knowledge of corporate governance – the ability to facilitate the governance processes and ensure regulatory compliance.
  • Facilitate leadership – the ability to inform and brief fellow directors on current organisational matters and strategies and the ability to lead constructive and timely discussion and debate, drawing on the expertise of the board.
  • Business acumen –having a strong understanding of the organisation’s business and financial model and key elements which drive their performance.
  • People skills – experience in motivating, managing and dealing with people including evaluating performance, succession planning and executive remuneration.

Personal attributes expected of chairs

  • Integrity – meeting fiduciary duties and responsibilities, acting ethically, having appropriate independence, putting the organisation’s interests before personal interests.
  • Collaborative leader – the ability to inspire the individual contribution and participation of each board member and senior executive to fully utilise their collective expertise to set the aims, strategies and policies of the organisation.
  • Effective communicator – the ability to engage and effectively communicate with all stakeholders.
  • Emotional intelligence – as well as self-awareness and self-management, the chair needs to be able to motivate and be able to empathetically manage situations where strong emotions are present.
  • Commercial astuteness – demonstrates good business instinct and acumen.
  • Engaged commitment – a willing participant with genuine interest in the organisation and its business.

Functions and tasks expected to be performed

A sample general list of various functions and tasks that a chair is expected to perform and attributes considered desirable in an effective chair.

Chair

(a) Functions and tasks to be performed by an effective chair:

  • Convenes board meetings;
  • Oversees the agenda for board meetings;
  • Oversees the adequacy, timeliness and appropriateness of information provided to directors;
  • Oversees the quality, sufficiency and relevance of financial information made available to the board;
  • Runs board meetings including:
    • Ensuring the business of the meeting is dealt with effectively and efficiently;
    • Encouraging participation in deliberations by all board members so that the benefit of each member’s perspectives and contribution can be shared and considered;
    • Maintaining the meeting’s focus on strategic and other priority matters;
    • Setting standards of behaviour and engagement at board meetings and discouraging behaviour inconsistent with those standards;
    • Keeping the meeting’s focus on the subject matter to hand.
  • Oversees aspects of board engagement including:
    • Developing a culture of respect and inclusion amongst board members and the executive;
    • Counselling board members and the CEO;
    • Facilitating board and director evaluations and reviews;
    • Facilitating director, board, board committee (as applicable), CEO and chair succession planning and its execution;
  • Acts as the board’s representative in communications between the board and the:
    • Shareholders or members (as applicable) and broader stakeholders;
    • CEO;
    • Management;
    • Effectively and fairly represents the organisation, in co-operation with the CEO, in the organisation’s communications with its broader stakeholders, respecting the primacy of the CEO’s role in this respect;
    • Exemplifies the organisation’s agreed values and standards of behaviour;
    • In alignment with the CEO, is visible at times of crisis where trust and confidence in the ability of the board and management to respond to the crisis is important.

(b) Attributes and skills considered desirable in an effective chair:

  • Fostering a stimulating and challenging boardroom environment with full and frank debate on issues as well as leading the board to making a decision in a timely manner after all relevant perspectives have been contributed;
  • Being respectful, yet candid and decisive, in facilitating board, board committee, director and CEO evaluations, reviews and succession planning;
  • Being open and engaging and having good interpersonal skills enabling the chair to communicate effectively with and gain the trust and confidence of his/her intended audience;
  • Having good public and private speaking, and listening, attributes to enhance his/ her ability to effectively fulfil the roles and responsibilities of the office of chair;
  • Treating other directors with respect and make clear that the contributions of all directors are valuable, while finding ways to deal tactfully, yet effectively, with directors who may otherwise be disruptive;
  • Being approachable and impartial in their dealings with directors, officers, key shareholder or member representatives and others in the best interests of the organisation;
  • Being aware of the powers entrusted to him/ her by the organisation’s constitution, governance/board charter and at general law, including with respect to the conduct and running of meetings (board, board committee and shareholder/member);
  • Through the chair’s displayed skills, experience, knowledge, inter personal skills, values and conduct, gaining the trust and confidence of the directors and the shareholders or members of the organisation so as to garner sufficient informal power and authority to properly represent the board and to discharge the responsibilities expected of a chair;
  • Being respectful of the responsibilities of the office of chair and the limitations of his/her powers and authorities, so as not to bring the office of chair into disrepute or overstep those limitations of power/authority.

Disclaimer

This document is part of a Director Tools series prepared by the Australian Institute of Company Directors. This series has been designed to provide general background information and as a starting point for undertaking a board-related activity. It is not designed to replace legal advice or a detailed review of the subject matter. The material in this document does not constitute legal, accounting or other professional advice. While reasonable care has been taken in its preparation, the Australian Institute of Company Directors does not make any express or implied representations or warranties as to the completeness, currency, reliability or accuracy of the material in this document. This document should not be used or relied upon as a substitute for professional advice or as a basis for formulating business decisions. To the extent permitted by law, the Australian Institute of Company Directors excludes all liability for any loss or damage arising out of the use of the material in this document. Any links to third-party websites are provided for convenience only and do not represent endorsement, sponsorship or approval of those third parties, or any products and/or services offered by third parties, or any comment on the accuracy or currency of the information included in third party websites. The opinions of those quoted do not necessarily represent the view of the Australian Institute of Company Directors.