Leading the board of a major corporation in today’s rapidly evolving environment is a privilege, and also, at times, a challenge. Every industry is reinventing itself in the face of stiff competition: innovating market offerings, seizing opportunities created by technology while fighting to be attractive in the war for talent, and increasing resilience when faced with supply-chain disruptions, financial volatility, and geopolitical instability. Meanwhile, organizations across industries and geographies must take swift, bold actions to address the climate challenge. And raised societal expectations of company behavior means that the social license to operate increases outside scrutiny of every move.
The chair’s role has been transforming for some time; the trend toward greater transparency and accountability has been inviting the chair of the board to become increasingly visible to a wider group of stakeholders, not just shareholders.
What does it take to be a successful chair in this environment? The Deloitte Global Boardroom Program undertook research to find out, and in this publication, we offer it to you. This report presents the reality, aspirations, and advice expressed by more than 300 chairs. It was collated from Deloitte’s research into the chair of the future in Australia, Belgium, Canada, China, East Africa (Kenya and Uganda), Germany, India, Ireland, Italy, Japan, New Zealand, the Netherlands, South Africa, the United Kingdom, and the United States. These board chairs, who represent major listed companies and significant private, sometimes family-owned firms, provided their insight into fundamental questions such as: What will the "chair of the future" look like? What skills, capabilities, and experiences will be required to be a successful chair? And how should chairs oversee management as their organizations face these manifold challenges?
The primary focus of the chairs’ advice is on the evolving role of the chair and how behaviors of chairs can pivot during periods of challenge and upheaval. Several striking themes emerged from these interviews around the world, which are described in this report as the five forces of change.
This review offers an opportunity for current and aspiring chairs to learn from prominent board chairs who generously shared their experience and ideas. We hope that this report sparks fresh conversations and raises awareness in anyone who is curious about one of the most influential roles driving the impact and future success of business: the chair.
Sharon Thorne, chair, Deloitte Global
Board chairs have seen their roles and responsibilities grow dramatically over the past few years. It’s a job that’s become all-encompassing.
Chairs today play a critical role in the success or failure of their organizations; they serve as a trusted sounding board and guiding hand for the CEO1.
But huge developments are redefining the role in real time: unforeseen events, such as the COVID-19 pandemic and geopolitical disruption, add to the inexorable challenges of digital transformation, climate change, increasing regulation, and investor scrutiny. Yet as they become more active on virtually every front, chairs must also take greater care to respect the boundaries between their role (governance and oversight) and those of the CEO and the C-suite team (management and operations). A chair from Ireland observed that boards should not be “drawn to problem-solving”; instead, chairs must focus on bringing “a strategic and long-term lens” to their organizations.
To get a better sense of how the position is changing and what the chair of the future can expect, the Deloitte Global Boardroom Program brought together interviews, roundtable discussions, and surveys of more than 300 board chairs in 16 countries (see Methodology sidebar).
In these conversations, several striking—and somewhat unexpected—points of commonality emerged. As chairs navigate a new world of challenge and opportunity, the research revealed five fundamental forces of change (figure 1):
Some fundamental qualities that make for successful chair and board relationships with management have not changed. Having a high level of trust between the chair and CEO, for example, remains essential to a successful relationship between them and to the success of the business. CEOs should have a trusted and confidential sounding board in the chair, and be willing to be vulnerable without fear of repercussions. The chair of a company in Belgium noted, “Vulnerability means reflection and questioning, which is a good thing.” Chairs should also have a deep understanding of the companies they serve and be willing to offer their time and experience generously.
What has changed is the depth and breadth of that involvement. While many chairs reported that board meetings are less formal than in the past, the responsibilities of board service and, in particular, of the chair, have escalated. “You can’t be a faraway figurehead. You need to understand the business you are involved in. You are not effective if you only know how to run boards,” one South African chair stated.
As the “ultimate chief reputation officer,” as described by a UK chair, the chair should provide a guiding hand on a wide range of internal and public-facing matters. While the challenges can be daunting, the pandemic proved that chairs could help their organizations pivot and respond to unforeseen events and even emerge stronger by focusing on big-picture goals such as innovation, digital transformation, improved efficiency, and agility.
“You can’t be a faraway figurehead. You need to understand the business you are involved in. You are not effective if you only know how to run boards.”— Chair, South Africa
As traditional roles evolve, chairs can encourage new thinking and help foster innovation. Recognizing that fear of change is often a greater obstacle than change itself, many chairs believe it is their job to help management be bolder and faster in how they assess risks and rethink operating models. Chairs should:
Chairs globally see the changing relationship between business and society as another key force affecting their role—and are holding management accountable for it. Without exception, across countries, they feel a deep sense of responsibility for the positive and possible negative impact their businesses have on communities and the planet. Increasingly, they see a close connection between prosperity for communities and the environment and the future of business. One chair of a Japanese company recognized that doing business itself is, or should be, a matter of ”improving the world.”
Views on how to help navigate these evolving responsibilities vary. Most chairs acknowledge a responsibility to prevent harm to local communities and address society’s most pressing challenges. A US chair explained, “Boards have to think about all their stakeholders holistically—customers, employees, suppliers, investors, regulators, and government.” There is increased recognition that securing society’s acceptance of business operations should be part of any organization’s social license to operate. Others talked about a need for corporations to collaborate with governments, and with other companies, to help solve pressing societal problems. For example, the chair of an organization in India spoke about his organization’s partnership with 15 companies to build a shelter for migrant laborers who were especially hard hit by the pandemic.
Of course, the idea of being a good corporate citizen is not new. As one chair of a private, family-owned company in Germany noted, “Sustainability and ethical values have been part of our corporate culture for decades.” Yet what appears to have changed is the sense of urgency, and the risk of being left behind for those who fail to adapt and change.
Chairs recognize they play a key role in driving the company-society relationship and effecting positive change through environmental, social, and governance (ESG) strategies and stakeholder engagement. As this responsibility deepens in the years to come, chairs should work harder to:
“The ESG agenda and focus areas need to be visible and factored into the board calendar for discussion.”– Board chair, East Africa
Given the enormity of the challenge and the operational, regulatory, and reputational risks it poses, climate change is top of mind for many board chairs around the world. As the chair of a company in South Africa explained, “If we as business leaders don’t recognize the impact of climate change and put it on companies’ agendas, we will not have a sustainable business. Chairs need to understand these issues to be able to drive the agenda.”
Meeting the challenge requires close collaboration between the chair and CEO, the board and management team. While implementation falls on management, chairs believe boards should play a vital role by placing climate change high on the company agenda. “It’s an iterative, dynamic process,” a UK company chair explained. “The board has been actively involved with management in assessing the risks and opportunities around climate change, in developing the policies for the near term and long term, and in setting the targets.” In fact, many chairs highlighted not just the challenges, particularly regarding Scope 3 emissions, but also the opportunities that could emerge for companies that take climate change seriously and shape effective strategies to address its impact.
“There is no excuse for not moving forward. Climate puts the whole survival of the company at risk.”— Chair, a company headquartered in the Nordics
All chairs agreed on the importance of educating the board on the climate challenge. This, of course, involves devoting time to reading and self-study, but chairs also find value in inviting climate specialists to the board to raise climate fluency levels.
There’s less consensus on whether boards should add a climate specialist or establish a specialist committee. For example, while three-quarters of Italian chairs surveyed note their organization has an ESG committee, some chairs from other countries say the board should explore climate issues together. Regardless of structure, most chairs coalesced around these necessary tasks:
Even before the pandemic, chairs and boards perceived an increasing frequency of crises, and many had already experienced crises in their organizations.2 Chairs in New Zealand observed that during the pandemic, the experience of those who had navigated a crisis before became invaluable in dealing with the uncertainty and providing guidance to the board. Uniformly, chairs note that managing crises today calls for resilience and greater speed in decision-making, action, and communication,3 under increased public scrutiny. Challenges can arise quickly, leaving boards little time to digest and understand every issue fully before acting. Indeed, chairs and boards may be compelled at times to take a leap of faith, making decisions with less information than desirable. In fact, some chairs said their companies now operate in a sort of continuous state of crisis management.
But operating in crisis mode has had its benefits. Encouragingly, chairs have learned a lot about their own and their companies’ ability to respond, adjust, and embrace digital technologies under pressure. Concerned that their companies might revert to old ways after a crisis ends, many chairs are working to incorporate agile and responsive thinking and action as part of everyday business.
To support agility, chairs say they are holding shorter but more frequent meetings and enabling members to attend virtually, to fit those additional meetings into their schedules. And they have also intensified the number and cadence of communications with the CEO and had greater access to the senior management team. Looking ahead, the chair of an organization based in India expects boards to resolve smaller issues by having more frequent virtual meetings. Chairs also emphasized their role in preparing their boards and companies for uncertain futures, for example, by leading discussions on scenario planning.
Companies that managed to enable business continuity during the pandemic also took decisive measures to reconfigure their business models, accelerating digital transformation. And organizations that started their digital journey years earlier had an easier time pivoting. As one East Africa chair shared, “Our investment in predictive analytics about two years before the pandemic started to pay off.”
“We deliberately created scenarios that were much more negative than what we were hearing around us. We wanted to factor in the consequences if the crisis lasted much longer than expected.”— Chair, Netherlands-based company
Board operations—the how, when, and where of board work—are being transformed. Chairs of the future may need to balance the new with the perennial: running the board more nimbly and with more flexibility, while safeguarding the fundamentals of providing valuable corporate stewardship.
Like the companies they serve, chairs adjusted quickly to the pandemic, leading board meetings virtually. After a steep learning curve, many found engagement improved while meetings became more agile, shorter, more frequent, and often, more focused. Others noted that scheduling became easier, since members could be more flexible with virtual meetings, and travel restrictions provided more time in the day. Boards now have experience convening at short notice to discuss matters of urgency.
Yet many chairs and board members missed some key aspects of face-to-face interactions. Remote meetings make it harder to read the room and pick up on nonverbal communication, they said. And some felt that the more exploratory board conversations were short-changed. Thus, chairs must work a little harder to keep directors focused and attentive. As the chair of a Japanese company said, “Outside directors bring a wide range of views to the board, so I believe it is more important for me, as a chair, to summarize the opinions of each director, to manage the time for discussion, and to conduct proceedings from a bird's-eye view so as not to miss any issues.”
“Outside directors bring a wide range of views to the board, so I believe it is more important for me, as a chair, to summarize the opinions of each director, to manage the time for discussion, and to conduct proceedings from a bird's-eye view so as not to miss any issues.”— Chair of a Japanese company
Even with the return of in-person gatherings, virtual meetings have demonstrated their usefulness and are clearly here to stay. Chairs must decide which works effectively under which conditions, and double down on fundamentals to facilitate a successfully functioning board.
Chairs expect to capture what is effective from both options by adopting a hybrid model of virtual and in-person board meetings. For example, chairs may use virtual meetings to discuss ongoing board business, such as monitoring progress, financial reporting, and risks.
In-person meetings, meanwhile, may be devoted to topics involving the direction of the organization, such as strategy, climate, and technology; important workforce matters such as diversity, equity, and inclusion; and executive pay. To make board and committee meetings as effective as possible, chairs are constantly exploring how prereads and other materials can be deployed to help streamline agendas. Whatever the mix ultimately looks like, chairs agreed they must strive to:
Serving as an effective board chair has never been easy. Yet chairs are being asked to provide leadership and direction to an unprecedented degree. A key challenge is trying to “find the balance between supervising, facilitating, and acting as a sounding board,” explained the chair of a Netherlands-based company. Different situations will call for all of those roles, the chair advised, “so work on your communication skills.”
Board chairs are being held accountable much more than before—by the public, the media, investors, customers, suppliers, employees; and, of course, by regulators. Today’s chairs must walk a fine line between sometimes opposing choices. They should steer the longer-term strategic direction without overstepping; manage the board while encouraging debate and a multiplicity of views; support management while challenging their assumptions; and engage a wide range of stakeholders without being hijacked by every demand.
One chair of a Japanese firm noted, “It is natural that short-term profits should be taken into account, but to be a sustainable company, it is more important to operate the boardroom from a longer-term perspective.” The chair of a UK company advised, “Build a relationship with all stakeholders so you can discuss issues with them in difficult times.”
The following advice, assembled from the collective wisdom of the chairs who participated, may help provide a roadmap for the chair of the future.
1. Build relationships. Create bonds with the board, management, stakeholders, and, especially, with the CEO, while also maintaining the independence of thought.
2. Prioritize for the long term. Don’t sweat the small stuff. Understand and focus on what really matters.
3. Understand the business. Chairs may struggle if they don’t know the many facets of the business, its operations, people, competitive landscape, and culture.
4. Lead on purpose and values. Chairs must make tough and, at times, unpopular decisions in the long-term interest of the reputation of their organizations.
5. Be a learning leader. Confronted with many unknowns, chairs must be comfortable asking for help, continuing to learn and must lead a “learning board.”
6. Nurture a broader skill set. Technical skills matter, but so do emotional intelligence and the ability to draw out the best in others.
7. Embrace diversity. Diversity in all its forms drives productive discussion and helps prevent groupthink.
8. Be a good listener. Adding value to the organization requires listening to those around you, especially when opinions vary, to allow views to be fully explored before drawing a consensus.
1. Be careful not to overcommit. Given the demands of serving as chair, think seriously about the number of board appointments you accept.
2. Be realistic. This is a prestigious position, but one that carries great responsibility. Be prepared to roll up your sleeves and work hard.
3. Build your pathway. Most chairs have held other board positions prior to taking the leadership role.
4. Manage the transition from CEO to chair. If you have stepped up from CEO to chair, the transition, particularly of your mindset, can be challenging, especially for first-time chairs. This is something to watch, especially in the rare circumstance of moving from CEO to chair within the same company.
5. Find a mentor. Chairs are willing to support each other. Find someone who has already experienced the challenges to help you embrace your first chair role with confidence.
As part of Deloitte’s commitment to supporting the next generation of business leaders, the Deloitte Global Boardroom Program has brought together in this report the findings from “Chair of the future” research conducted in 16 countries.5 This report collectively reflects the insights of more than 300 board chairs of some of the largest companies in the world, listed and private entities, as well as a number of large family businesses. The research was gathered via interviews, roundtable discussions, and surveys over the past few years.
Some of the commentary reflects the role of chairs during the COVID-19 pandemic, but the focus is primarily on the role of the chair in the context of business strategy. The report offers readers the opportunity to learn from prominent board chairs who shared their experience and ideas.
The Deloitte Global Boardroom Program brings together the knowledge and experience of Deloitte member firms around the world to address critical topics of universal interest to company boards and the C-suite. Supplementing geography programs, its mission is to promote dialogue among Deloitte practitioners, corporations and their boards and management, investors, the accounting profession, academia, and government. In addition to the publication of thought-pieces on critical topics, the Deloitte Global Boardroom Program hosts a series of must-see webinar discussions with eminent panelists to enable boards and management of global companies to challenge perceived wisdom. For more information about the program contact email@example.com.