From The Archives: The Board Chair
One of the things I am spending a lot of time on these days is Board leadership. That usually means Board Chair, but can also mean “Lead Director.” If you have a Board of five or more and are struggling with managing your Board, get a Board Chair or a Lead Director asap. Here’s a post from the archives about this.
Continuing our series on The Board Of Directors, this week I’ll talk about the role of the Board Chair.
The Board Chair runs the Board Of Directors. He or she is a Board member with the same roles and responsibilities as the other Board members. But in addition, the Board Chair is responsible for making sure the Board is doing its job. The Board Chair should make sure the Board is meeting on a regular basis, the Board Chair should make sure the CEO is getting what he or she needs out of the Board, and the Board Chair should make sure that all Board members are contributing and participating. When there are debates and disagreements, the Board Chair should make sure all opposing points of view are heard and then the Board Chair should push for some resolution.
The Board Chair should be on the nominating committee and should probably run that committee. I do not believe the Board Chair needs to be on the audit and compensation committees, but if they have specific experience that would add value to those committees, it is fine to have them on them. Either way, the Board Chair needs to be on top of the issues that are being dealt with in the committtees and making sure they are operating well.
Small boards (three or less) don’t really need Board Chairs. In many cases the founding CEO will also carry the Chairman title, but in a small Board, it is meaningless. Once the Board size reaches five, the Board Chair role starts to take on some value. At seven and beyond, I believe it is critical to have a Board Chair.
It is common for the founder/CEO to also be the Board Chair. I am not a fan of this. I think the Chair should be an independent director who takes on the role of helping the CEO manage the Board. The CEO runs the business, but it is not ideal for the CEO to also have to run the Board. A Chair who can work closely with the CEO and help them stay in sync with the Board and get value out of a Board is really valuable and CEOs should be eager to have a strong person in that role.
When a founder/CEO decides to transition out of the day to day management but wants to stay closely involved in the business, the Board Chair is an ideal role for them, assuming that they were responsible for recruiting or grooming the new CEO. If the founder is hostile to the new CEO, then this is a horrible idea.
When Boards get really large, like non-profit boards, the Board Chair is even more important. I’ve been on a few non-profit Boards over the years. I don’t really enjoy working in the non-profit world, but I do it from time to time. I have had the opportunity to watch a couple amazing Board Chairs at work and I’ve learned a ton from them. The partnership between Charles Best and Board Chair Peter Bloom at Donors Choose is a thing of beauty. Same with the partnership between John Sexton and Board Chair Marty Lipton at NYU. For profit CEOs and Board Chairs could learn a lot from watching these masters at work.
When it works, the Board Chair role is hugely impactful. It allows the CEO to spend their time and attention running the business and not worrying about the Board. The Chair will manage the Board and when the CEO has issues with the Board, the Chair will be clear, crisp, and quick with that feedback and will help the CEO address those issues.
Many CEOs find working with a large group of people who have oversight over their work and performance challenging. It makes sense. Who has ever worked for six or more people at the same time. How do you know where you stand with all of them? How do you know what they want you to do? How do you know what is on their minds? The Board Chair’s job is to give the CEO a single person to focus on in dealing with these issues.
The Board Chair job is hard, particularly when the company is in crisis, but it is also extremely gratifying. It is an ideal job for entrepreneurs and CEOs to take on when they are done starting and running companies and want to move into something a little less demanding. I’m always on the lookout for people who can take on this role in our portfolio companies. The good ones are few and far between and worth their weight in gold.
This week’s playlist: Fred’s Greatest HitsNext week’s playlist: Fred’s Basement Tapes
I’m waiting for the Wilson-Colonna Reunion World Tour.
Ah, the good ‘ole days. I remember the day they went electric.
It is common for the founder/CEO to also be the Board Chair. I am not a fan of this. I think the Chair should be an independent director who takes on the role of helping the CEO manage the Board.Business should always be arms length except in extraordinary circumstances and for a compelling reasons.CEO as Chairman? I offer this as a low hanging fruit confirmation of that:https://www.theranos.com/le…One more thing because I always wondered how important busy people involved in many things (and on many boards) could realistically offer much value other than pulling strings:”With three former cabinet secretaries, two former senators, and retired military brass, it’s a board like no other.”http://fortune.com/2015/10/…
LE:our comments regarding Elizabeth Holmes Founder, CEO and Chairman of Theranos we had posted before the uproar, clinical and scientific findings viewed the entire situation of failure to submit clinical and scientific studies has a red herring. When does just not having the experience and college education resonate with investors. (There is a reason there are few Mark Zuckerberg’s and Bill Gates not completing college)
CEO-Chairman: Mark Zuckerberg.Chairman: Eric Schmidt, CEO: Larry PageAt Apple, when he was replaced by Cook as CEO, Jobs became Apple’s chairman. Prior to this, Apple did not have a chairman and instead had two co-lead directors, Andrea Jung and Arthur D. Levinson, who continued with those titles until Levinson became Chairman of the Board in November.Again, whether to separate the roles is IT DEPENDS.I know a few seasoned “Gray Hair” Chairmen but they wouldn’t be right for me as a founder because they have no domain expertise in AI — and, even if they did, they’d probably belong to the existing Cartesian logic, mechanics & probility+stats approach which is producing all the biased and narrow systems incapable of Natural Language Understanding.The Google founders absolutely picked the right CEO and then Chairman because Schmidt had a wealth of network know how from Novell, Sun and PARC.The Theranos case is just so sad for all sorts of reasons.
is Park City becoming the new Davos?
beware the bored Chair.