HR
The failure by some boards to adequately monitor and direct the affairs of their organisation has brought to the fore the crucial importance of those at the helm of Irish business fully understanding and executing the responsibilities of their role.
The most important role is that of the chairperson of the board, whose function is to ensure that the board is effective in its tasks of setting, implementing and monitoring the company's direction and strategy. The chairperson of any organisation holds ultimate responsibility for managing the board's business and acting as its facilitator and guide, while representing and articulating the company's aims and policies to its stakeholders.
Effective leadership
As the overseer of the board, the chairperson must provide leadership and set the tone of behaviour from the top. This means upholding the highest standards of integrity and probity, encouraging open dialogue and communication among board members and promoting high standards of corporate governance within the organisation. A failure by the chairperson to properly adhere to professional standards, or indeed to advocate for such standards in the board, can result in significant problems in the boardroom and the business.
At a functional level, the chairperson should ensure that the board receives an appropriate level of training for the role and proper and timely information. The chairperson is responsible for determining the agenda for board meetings, setting the style and tone of board discussions and encouraging constructive challenge and balanced decision-making by the board.
The chairperson, in conjunction with the nominations committee, must take a leading role in determining the composition and structure of the board and should develop a skills matrix for board appointments. The presence of independent non-executive directors on a board is vital to ensure objective and external contribution. The chairperson should conduct regular reviews of the size of the board, the balance between executive and non-executive directors and the balance of skills, experience and expertise of board members.
It is also important that the performance of the board is evaluated, along with that of individual directors. There is much to recommend opting for an external experienced evaluator to conduct such evaluations, which would greatly increase transparency and independence. The involvement of an independent external assessor also provides greater assurances to stakeholders that the evaluation was both rigorous and objective.
An evaluation of the board also allows the chairperson to identify any change or succession planning requirements with regard to board appointments and any skills gaps on the board. It is important that the chairperson builds an effective and complementary board which operates as a collective entity and is capable of appropriately monitoring and directing the affairs of the company in the interests of its shareholders and relevant stakeholders.
The role of the chairperson is one that should not be underestimated or entered into lightly. It is a position which, now more than ever, demands the highest levels of integrity, coupled with a breadth of knowledge and experience as a director.
Thora Mackey, Head of the Boardroom Centre at the Institute of Directors in Ireland.