Leading Boards in Chaos and Uncertainty? Have an Enlightened Approach
In this article, co-authors Rita Goyal, Nada Kakabadse, Andrew Kakabadse, and Danielle Talbot explore the relationship between well-governed companies and the wealth and well-being of stakeholders. This topic is the inspiration behind their research article, “Seven Mantras for Board Chair Effectiveness—An Enlightened Approach for the 21st Century,“ found in the Journal of Management Inquiry.
Our article addresses the pivotal question of what sets well-governed companies apart from those jeopardizing stakeholders’ wealth and well-being. We argue that the key to sustainability and effective governance lies in the presence of an enlightened chair. In an article set in top-listed companies in the UK and published in the Journal of Management Inquiry, our study records seven mantras of enlightened board governance.
The UK has pioneered several corporate governance reforms. One of the most discussed reforms is about making boards diverse. During my doctoral research on board diversity and effectiveness, I interviewed 50+ board members, who repeatedly underlined the crucial role of a chair in both. However, the extant knowledge did not adequately discuss the best practices of effective board chairs and was mostly focused on the CEO’s role and leadership.
Unlike CEOs’ performance, which can be quantified with firm performance indicators, chairs’ contribution is fluid and difficult to ‘measure’. Therefore, a research approach integrating the views of chairs and other board actors was needed to bridge this knowledge gap.
However, interviewing board members entails considerable challenges because corporate elites are known to only interact with those they trust. I was privileged to be affiliated with a business school that several corporate leaders of top-listed companies call their alma mater. Additionally, I had a few board members in my network. Several of these corporate elites agreed to be interviewed and then introduced me to other board members in their networks. With data from 57 interviews, my co-authors and I wrote the article on the most effective practices of board chairing.
The article provides a roadmap, particularly for those who are transitioning from an executive role (e.g., CEO) to a board chair role where the nature of engagement (non-executive and part-time), remit (governance, long-term, vision setting) and expectations are different. The paper provides insights which may have global implications for policy and corporate praxis because the UK regulations are emulated globally.
One of the surprising findings of the research is that the practices for effective board learning are the same for chairs of for-profit and non-profit sector companies. Despite distinct objectives, governance structures and often the size of operations, the chairs of both sectors seem to rely on an enlightened approach to leading, which includes – exercising ‘influence’ and not ‘power’, personal and professional adherence to values, support for the CEO, inclusive communication, composition of a diverse board, intuitive conflict resolution and reflection for course-correction.
Our study also finds (though not discussed in the paper) that despite an ever-expanding remit of board chairs, it is becoming increasingly hard to find experienced and competent corporate leaders who are willing to take up the role. Successful CEOs looking to retire from active corporate roles prefer to be angel investors in interesting businesses, with much less accountability than those of chairs. Future researchers may like to pursue this dilemma further. Other relevant literature on the chair’s role performance is Kakabadse (2010).
