The relationship between the CEO and the chairman is key to the eff ective functioning of a board. Leadership is a team sport. Where the role of CEO and chairman is split – only one in five boards now have combined roles – much depends on their relationship. They have to work together. There has to be absolute trust and respect between them. If not, the company will quickly encounter problems. In a political sense, the two roles might be likened to the Prime Minister and the Chancellor of the Exchequer.


Overlap can be dangerous. The chairman runs the board and evaluates strategy, manages corporate governance and manages non-executives. The CEO runs the company and manages dialogue with shareholders. Increasingly, such clear management divides no longer exist. Now, the chairman’s role involves being in touch with and reaching out to the external environment as well as enabling the board to function as a team. The chairman has to bring wise judgement and counsel, to act as a guide and mentor.


The best CEOs recognise that the chairman has an important role to play. At times this might mean saving the CEO from themselves.


Research by Andrew Kakabadse of Henley Business School, and author of Leading the Board, suggests that much more needs to be understood about what a world class chairman does. “If the CEO is the heart of the company pumping vibrancy through its very core, the chairman is the soul of the corporation, its conscience, its moral keeper,” he says.5


Kakabadse uses an automobile analogy: It is the chairman who is ultimately responsible for the roadworthiness of the vehicle, and the safety of all those on board – shareholders, employees, and customers. He or she must ensure that the CEO (the driver) is carrying out the necessary safety checks on the vehicle, that there is enough rubber on the tyres, petrol in the tank, oil in the engine, and water in the windscreen washers. The chairman must also ensure that the necessary licences are up to date and the paperwork is in order if they get pulled over.


But, and it is an important but, the CEO must be allowed to operate the throttle and steer the car. The chairman sits in the passenger seat. They are there to stamp on the brakes or grab the wheel if required. The chairman and the board


5 Kakabadse, Andrew and Kakabadse, Nada, Leading the Board, Palgrave Macmillan, 2008


should be consulted on the destination, but they must not interfere while the CEO is driving, and they should leave the actual route to the executive team.


In essence, chairmen are leaders. As such they need to develop and display leadership styles that are focused on business performance but engage the commitment of executives and non-executives.


The reality is that being a chairman means exercising a much more subtle form of leadership. Their role is fl uid, depending on the context of the board and the business. Their power is discharged in a very diff erent way. They have to bring together a team of people who don’t see each other very often and get them to work together. The best chairmen are not charismatic megalomaniacs. They work hard on team dynamics. This requires a sophisticated understanding of people.


The chairman needs to be close enough to the day-to- day activities of the company to ask questions and call the management to account. But, the need for external awareness demands that chairmen spend time outside the company.


“If the CEO is the heart of the company pumping vibrancy through its very core, the chairman is the soul of the corporation, its conscience, its moral keeper.”


There is some concern that chairmen need to spend more time in top companies. (According to the National Association of Corporate Directors, the hours individual directors devote to board service has grown from 155 per year a decade ago to an average of 200–230.6


) Clearly,


whether they are working with an inexperienced CEO has an impact on the time needed. Given the scale and complexity of these organisations, chairmen need be able to fl exibly adapt their schedules and commitments when required. This is an issue which is likely to become more important. Leadership demands time.


6 National Association of Corporate Directors, 2012–2013 Public Company Governance Survey, 2013


Heidrick & Struggles 9


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