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Insync Surveys and Board Benchmarking have today released a study called Chair leadership: An inside look at how well board chairs perform, based on the views of 778 directors who sit on 92 different Australian and New Zealand boards.
The research report looks at eight main issues that relate to the effectiveness of board chairs. Boards and their board chairs have passed just half of these tests.
Mr Nicholas Barnett, Insync Surveys’ Chairman, said: “Having an effective board chair is a fundamental prerequisite for having an effective board. An ineffective board chair not only holds back a board, but can also hinder the CEO and the entire organisation.
“Pleasingly, most boards gave their board chairs high marks for:
- having a constructive working relationship with the CEO (79% agree)
- having an effective personal leadership style (78% agree)
- conducting an effective decision-making process (72% agree)
- ensuring the board’s workload is dealt with effectively (64% agree)
“However, the most disappointing result of the research is that only 43% of directors believe the performance appraisal of the CEO is handled well.
“It is a major role of the chair to set and maintain high expectations for organisation performance and this includes ensuring that the CEO’s performance appraisal is handled well.
“The performance appraisal of the CEO requires a well planned process which engages all directors. Done well, it can enhance the level of respect and the working relationship between the chair and the CEO.
“Unfortunately the report also shows that only 39% of directors believe their board has appropriate documentation for the role and responsibilities of their chair.
“While most chairs are performing their roles well, a major concern that arises from the research is around what happens when a board believes its chair doesn’t undertake important activities well.
“It can be very difficult to remove an ineffective chair and where there are issues with chair performance, it’s particularly important for boards to have clear documentation of the chair’s role and responsibilities. Without such documentation, an essential input into the effectiveness of the chair is missing.”
Measuring chair and committee chair effectiveness are the final two areas where boards aren’t up to scratch. Only 16% and 10% of directors respectively agree that chair and committee chair performance assessments are comprehensive.
“Having a regular and formal assessment process of the effectiveness of the board, the board chair, board committees, committee chairs and individual directors can help identify weaknesses and opportunities for improvement and be a catalyst for important changes,” said Barnett.