Professor John Anderson, who sits on several company boards, focused his comments on the critical role of the chair. He explained that the chair plays a pivotal role as both a mentor to a CEO but also ensuring the right blend of directors on the board.
The Strathclyde Business School professor was speaking at The Business/ Sunday Times Scotland Deals And Dealmakers business breakfast in Glasgow.
He urged the advisers in the audience to help companies select a better balance of advisers for boards. It was a point amplified by Andy Lothian who said he had a chemical engineer as a chair, who was the perfect fit and able to focus on the central board issues.
“When thinking about boards and non-executive directors, we need to seek out more diversity,” agreed Kerry Sharp, of Scottish Enterprise.
Anderson said: “The two key things that make for an effective chair are independence and experience.
“A chair is pivotal in creating the conditions for overall board and individual director effectiveness, setting clear expectations concerning the style and tone of board discussions, ensuring the board has effective decision-making processes and applies sufficient challenge to major proposals.
“It is much easier to do this from an independent standpoint.”
Investor directors are in an invidious position generally, as they are required to act in the interests of all shareholders and avoid conflicts of interest as part of their general directors duties.’
Founders and former CEOs and managing directors can struggle when they step up to become chair of their own company and learn that their role is not to provide answers.
“This is difficult. I have also seen situations where an investor director takes the chair role and this flies in the face of good governance.
“Investor directors are in an invidious position generally, as they are required to act in the interests of all shareholders and avoid conflicts of interest as part of their general directors duties under the Companies Act, which can again be difficult. This is only amplified in the role of the chair.”
The needs of the business, chief executive and managing director goes beyond simply good governance, he said.