Chairing with Courage in Uncertain Times

Being the chairperson of any organisation is a heavy responsibility because you are the leader of leaders – the leader of the board of directors; the leader of the team that is responsible for establishing and delivering on the strategy, setting the example of leadership and ensuring that governance is being implemented effectively at all levels in the organisation.

That takes courage and commitment, and requires a great deal of preparation before a meeting.

“Uncertain Times”? – I don’t believe that there are any real certainties in life other than death and taxes, so baked into the role of being a chairperson is the need for the strength and courage to be able to live with uncertainty and complexity; control or influence what you can and then insure against or avoid the rest.

Insurance

If you want to be courageous, then having Directors’ and Officers’ (D&O) insurance definitely builds confidence and bravery. If you follow a good governance process, make sure that agenda points are debated thoroughly before a decision is made, and minute meetings properly so that you can demonstrate that you and your team of directors did everything they could reasonably be expected to do to put the organisation first, then your legal costs are very likely to be covered by your D&O insurance should anyone try to sue the company and its directors for negligence. The law allows directors to make mistakes, but not to make decisions without proper thought of the consequences and how to mitigate the risks.

Having served as the chair of a business that we were trying to rescue – and eventually needing to liquidate the business because shareholders did not have the means to fund the turnaround – I am acutely aware of the importance of minuting meetings properly and ensuring that the decisions made are clearly and accurately recorded. In moments like those it is also critical to ensure that shareholders are not given preferential treatment above the many other stakeholders that are impacted, including landlords, clients, suppliers and staff.

Preparation

The best way to build confidence before any difficult conversation is to prepare properly. As a director, it is our role and responsibility to demonstrate Care, Skill and Diligence, by law! The law gives directors the power and authority to make decisions for the company, the board then decides what responsibilities are delegated down to the Managing Director/CEO and through him or her down into the rest of the organisation. Ensuring that policies are established that drive the implementation of the organisation’s purpose and strategy, and support the measurement of performance, helps to reduce variety and uncertainty. But this can be tough, thinking work that is often moved down the priority list until it’s too late.

If variability increases and we don’t even have a handle on the complexity of the previous circumstances, then we are increasing risk and reducing the sustainability of the organisation through negligence. The chair needs to have the courage to push through and make sure that the hard work gets done, but that requires a clear understanding of the risks and policy gaps through proper preparation and digging deep. As we say in the Sirdar definition of an effective board: “An effective board is one that, through its rhythm and decision-making, holds the company accountable to a performance standard higher than it has ever had before, resulting in increased value and improved return for shareholders and other stakeholders on a sustainable basis.”

This starts with the example set by chairperson, as the leader of the team. Always aim to be the best prepared person in the room.

Stay Strong, Remain Calm, Hold Your Nerve

When there is uncertainty, there is often fear too. ‘Fear of the unknown’ can be a powerful influence. The danger is that decisions are perceived to be less urgent than they should be because the board is operating from the mindset of, “We don’t know what’s going to happen, therefore we are going to do nothing until we know more”. By the time you ‘know more’ it’s probably too late.

The other extreme is that we act from a position of over-confidence; we have a false sense of certainty. This can lead to making decisions without proper deliberation and hindsight, oversight or foresight – making them too quickly rather than too slowly. We don’t ‘see’ what’s coming, because we didn’t look carefully enough having relied too much on false assumptions.

As the chairperson it is therefore critical that we have the courage to lead without fear or false certainty and to rather focus on what we believe is the best direction for the company knowing that the path may change. Do we have a clear vision of where and who we want to be in 3-5 years, or even 1-3 years? Ensure that we stick to our values, ethics, intent and focus on the logic of decisions rather than let emotion control the narrative. Containing the emotions and stabilising the system of decision-making takes a great deal of courage when everything else is in a state of flux. Fear – like war – can also draw board members into opposing factions or to consider shortcuts to profit, so there is a need to focus on the policies, process and intent that was defined and agreed in the past. Good governance principles need to be held onto.

The Chair that the Boardroom Needs

All of this boils down to a shortlist of traits that I believe a chairperson should have:

• Be independent. Being a truly independent non-executive director allows better foresight by reducing emotional connections to decisions in the past, thus allowing a clearer, more balanced view of the future.
• Be confident in the role and lead by example, rather than dominate the discussion.
• Be wise through experience across as many spheres of governance as possible.
• Stay calm. Preparation is key and a high EQ is essential.
• Follow a clearly defined methodology such as ISO 37000 and the Sirdar Governance Methodology.

Being the chair of a board is a key role that needs to be taken seriously. Uncertainty is the spice of life so rather lean into it, than be fearful of it. Volatility generates opportunities and risks, so it is our job to embrace both, manage them responsibly and do whatever we can in service of the best interests of the company.

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