What is the role of the chair? The chair (or chairperson) is essential to the smooth running and effectiveness of the board of directors. Since the chair represents the company to the outside world and determines the order of the agenda, this role requires excellent leadership skills.
The chair’s primary role is to ensure that the board is effective in setting and implementing the company’s direction and strategy.
Therefore, the chair is responsible for leading the board and focusing it on strategic matters, overseeing the company’s business, and setting high governance standards.
The chair plays a pivotal role in fostering the effectiveness of the board and individual directors, both inside and outside the board room.
This Lexicon guide will further discuss the role of the chair and the associated duties, along with what to bear in mind when choosing someone for this role.
What is the role of the chair of the board?
The Companies Act 2014 describes the position of the chair concerning the regulation of the conduct of meetings, so this would be a helpful reference regarding those duties.
Essentially, the role of the chair involves ensuring the effectiveness of the board in implementing company strategy. This can be done through their role in chairing important meetings and determining the agenda and the nature of the information received by the board members. This role is crucial when it comes to the accurate decision making of the board.
The role of chair of the board may be a full or part-time position. It can sometimes be combined with that of chief executive or managing director in smaller companies, although such a joint role would not be recommended for public companies. Following the corporate scandals of previous decades, the chair can play a valuable role in keeping a check on the CEO. However, such division has also created problems where the chair may act as a second CEO, creating conflict between the roles. So, it would be essential for an organisation to understand the differences between these two roles to maximise good governance and minimise friction and confusion among senior managers.
One difference is that a good chair provides leadership to the board rather than the company.
As the board’s leading representative, the chair presents its aims outside the boardroom. One of their duties involves providing a summary of discussions that can be agreed upon by the board. The chair also makes sure that meetings are well ordered and helps facilitate good decision making. In addition to the duties described above, the chair is also responsible for regularly reviewing the board’s composition, which is highly important for the effective running of the organisation.
Essentially the role of the chair can be broken down as follows:
- Leadership to the board
- Responsibility for the composition and development of the company
- Providing information to the board
- Conducting board meetings
- Involving and facilitating all directors in board meetings
- Giving focus to the board on critical tasks
- Reviewing the development and induction of directors
- Support of the chief executive or managing director
The following list provides further detail on the duties of the chair:
- The chair will set the board agenda, ensuring that directors receive accurate, timely and precise information to enable them to take accurate and authoritative decisions. The chair will ensure that sufficient time is allowed for complex or contentious issues and encourage active engagement by all board members.
- The chair should take the lead in ensuring that there is a formal induction programme for new directors. They should also make sure to address and resolve the various ongoing development needs of individual directors to ensure that they have a comprehensive understanding of what is required for them to fulfil their role on the board.
- Evaluating the performance of each board member in their role as a director annually and ensuring that the board’s performance as a whole and its committees are evaluated annually. Holding meetings with the non-executive directors without the executives being present.
- Ensuring effective communication with shareholders and particularly that the company maintains contact with its principal shareholders on matters relating to strategy, governance and directors’ remuneration. Ensuring that the views of shareholders are communicated to the board as a whole.
- As chair of the nominations committee, initiating diversity, change and planning succession in board appointments (other than concerning the appointment of a successor as chair) following procedures agreed from time to time by the board.
- Together with the chief executive, providing input to the remuneration committee concerning its recommendations to the board on the policy for the remuneration of the executive directors and its approval of the detailed terms of service of the executive directors and the company secretary.
- Together with the chief executive, advising the board in its determination of the non-executive directors’ fees (other than the chair).
- Being available to the chief executive to advise on matters relating to strategy and operations.
- In conjunction with the chief executive, representing the company to customers, suppliers, government, shareholders, financial institutions and the community.
So, in conclusion, we can see that the role of the chair is an essential one in ensuring good corporate governance and that they must act independently and be free of conflicts of interest. It is helpful to choose someone for this role who possesses good organisational skills and will effectively review the involvement and coordination of board members.
We would also like to mention that the chair of a charity has no less importance than that of any other organisation, either private or public.
Charity trustees are the people who ultimately exercise control over, and are legally responsible for, the charity. Each board of charity trustees should have a chairperson whose duties include:
- Leading the board and providing ongoing leadership for the board and its appointees.
- Along with the company secretary, ensuring the smooth running of board meetings.
- Promoting good governance among fellow charity trustees.
- Providing supervision and support to the manager/CEO (where applicable).
- Acting as a figurehead or spokesperson, where required.
The above description for the role of the chair of a charity comes from a document issued by the Irish charities regulator, entitled, the role of the chair of a charity (which can be accessed by clicking on the link).
You can see that, whether you assume the role of the chair in a charity company or a non-charity company, your duties and responsibilities remain the same.