Board Leadership… It Rarely Just Happens!

Fourth Quarter 2012
Corporate Board Member magazine
by TK Kerstetter

Nearly all of us remember the boards of yesteryear, when lead directors didn’t exist and board chairs were chosen because they had either served the longest or had the time to serve. Skip forward 20 years to today, and while many of the chairman’s duties have remained the same, there is an expanded set of skills required to provide true board leadership.

Board leadership is the linchpin of an effective board, and without this critical guidance role, success would be more challenging. People sometimes get upset when CEOs appear to be driving the board’s agenda, but without strong board leadership, a CEO is left with little choice but to grab the reins. There are times when that leadership plan can work—but it’s not a long-term formula for board success.

When we talk about the necessity for expanded skill sets for the independent chair or lead director, all we have to do is look at the companies that have made the news to remind us what’s important. How many times have we seen a chairman step forward and represent the company because the CEO was either let go or embroiled directly in a controversy? How many companies have we seen unprepared to handle a crisis or look foolish because they weren’t prepared to deal with a sudden CEO succession challenge?

And these are just the skills visible outside the boardroom—not taking into account the inside skills needed to lead constructive board meetings or establish good relationships with the CEO and other board members. All of these wrap up into a job description that, whether you are chairman or lead director, plays a major role in your board being an effective governing body.

This column has decided to offer a test for directors to analyze their current board leadership. While no one will replace their chairman based on this little exercise, it is designed to help you reflect
on how your board might stack up in the board leadership space.

In closing, many companies have been fortunate to have a system that has worked well for them over the years. If so, I say more power to you and a wish of continued success. But if you think your board could use some improvement or needs better focus—the time is now. In reality, you probably are in the majority, but to stand out from the crowd, you need to take action, because true board leadership rarely just happens on its own.

The Board Leadership Test
Please answer the following questions to determine your board leadership rating.

1. When we selected our chairman, some strategic thought went into the skill sets that were required to provide effective board leadership.
Yes, that’s correct ____ Not sure ____ Not the case ____

2. Our chairman has a constructive relationship with the CEO, communicates back and forth between the CEO and board regularly, and makes sure the board view is reflected in the board meeting agenda.
Yes, that’s correct ____ Not sure ____ Not the case ____

3. Our chairman isn’t hesitant to counsel directors on how they can improve their performance or push to replace a director who is not contributing.
Yes, that’s correct ____ Not sure ____ Not the case ____

4. If something happened to the CEO or we had a situation where the chairman needed to address the media and shareholders, our chairman is prepared to publically represent the company.
Yes, that’s correct ____ Not sure ____ Not the case ____

5. Our board leadership has a good handle on structural issues: i.e., board size, committee structure and leadership, CEO and board succession, etc.
Yes, that’s correct ____ Not sure ____ Not the case ____

6. Our board leadership has a good handle on operational issues: i.e., board calendar flow, executive sessions, committee report outs, etc.
Yes, that’s correct ____ Not sure ____ Not the case ____

7. Our board leadership has a good handle on board and company culture issues: i.e., tone at the top, expectations of both directors and management, board evaluations, etc.
Yes, that’s correct ____ Not sure ____ Not the case ____

To calculate your board leadership score, give 5 points for each yes answer, 2 points for a not sure, and 0 for a no answer. Then rate your board leadership using the scale below.

28 or greater: Nice going. You’ve established a board leadership foundation.

20 to 27: A little more focus on key issues will improve your board’s effectiveness.

19 or below: Don’t wait. It’s time to take a look at board leadership as an issue.

 

TK Kerstetter is chairman of NYSE Governance Services, Corporate Board Member and is a second-generation pioneer of governance thought leadership and board education.

 

Topic tags: board evaluation, board leadership, board of directors, corporate governance

 

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