PJ Neal

Thoughts from a more-than-occasional writer

The Critical Role of the Board Chair in Driving Board Performance [Harvard Law School Forum on Corporate Governance]

While all directors can contribute to the board’s success, the board chair has a unique set of responsibilities, both in the tone that they set, and their influence on how time and resources are deployed. The best board chairs are facilitators who get the best out of the collective expertise of the board—yet many chairs fail to play that role successfully. Year over year, we are constantly amazed at the sizable gap between observed chair behaviors on typical boards and those on Gold Medal Boards (boards whose directors rate their board effectiveness as a 9 or 10 on a 1-10 scale, and report the company as having outperformed relevant TSR benchmarks for two or more consecutive years), as shown below:

On every single measure, Gold Medal Board directors report seeing their chair outperform the chairs of typical boards: They are more likely to foster and facilitate high-quality debates (17 percentage points higher), give directors constructive feedback (+15pp), draw out the relevant expertise of the independent directors (+13pp), actively seek out different points of view (+12pp), focus the board’s attention on relevant matters (+11pp), and encourage independence (+7pp). What this data reveals is that being a great board chair is hard work, requiring active, constructive leadership and working hard to get the best ideas and input out of the board.

I had the pleasure of assisting Rusty O’Kelley, Rich Fields, and Laura Sanderson with this article, which was published by the Harvard Law School Forum on Corporate Governance.