The Chairman is the supreme executive officer of a group like a board, committee, or deliberations. The person holding the chief executive office, who most often is either elected or hired by other members of the governing body, presides over the day-to-day business of the governed group. The chairperson reports to the chief executive for the duration of the meetings of that body. Business decisions are generally made at these meetings and the Chairperson makes key decisions regarding policy decisions for the governed group.
The job of the Chairperson generally falls on the shoulders of a senior manager or a CFO. Since the CEO usually controls and directs all business activities of his/her corporation, it falls on the Chairperson to effectively and efficiently coordinate business operations and ensure the company’s profitability. In addition, since the Chairperson directs how executive personnel (i.e., the officers and staff) function, it is up to the Chairperson to effectively manage the corporation’s human resources department. Because of these key responsibilities of the CFO plays an important role as an executive chairman. He/She must ensure that key employees are performing their jobs, that the business is profitable, and that the officers and staff are performing their duties.
The function of a CEO or board chairperson traditionally has been to chair committees that discuss and recommend major strategic business decisions for the corporation. The committees are typically established to address pressing problems or issues facing the company. The ceo or chairperson may also serve as an interim CEO whenever a CEO is needed for a limited period of time due to illness or otherwise. This serves as a great deal of flexibility for the Board as well as the Chief Executive Officer. It relieves both the company and the Board from the burden of managing the difficult tasks of a CEO when a full-time position is not available.
In today’s business environment, the ceo or chairperson may also have more direct involvement in day-to-day business operations. In addition to providing leadership for major strategic business decisions, he/she will need to be responsible for recruiting, developing, and overseeing new management talent. This includes assisting newly hired management staff with the required training and guidance on basic business skills and competencies. As these new management teams progress through their own processes of establishing their operational procedures, policies and procedures, they will need assistance in this area from the Board Chairperson. In other words, the Chairperson will effectively be acting as the CEO’s personal aide and counsel.
Because the modern CEO is so directly involved in every meeting and decision, the Chairperson must be capable of handling and managing the administrative aspects of such tasks as meeting and/or dealing with a wide variety of concerns. For instance, managing directors is a task that requires expertise in legal matters. The Chairperson must know all of the ins and outs of securities laws and how to navigate and interpret them when negotiating with financial institutions. He/she will also be required to help new and experienced managers develop and implement policies to protect the best interests of their constituents. In short, the Chairperson must be an expert in business and the affairs of directors.
While some see the need for a non-executive chairperson in certain circumstances, the modern CEO understands that having a permanent chairman is a better solution. The current method for picking a leader, where a corporation holds a CEO search and interviews a number of potential candidates, proved to be both ineffective and too time consuming. Furthermore, such interviews revealed an unwillingness on the part of directors to be open to a long and drawn-out process. With a Board Chairperson selected by the board, the meetings can be conducted in a short period of time and focused. Furthermore, during such times when other leaders are unavailable or otherwise unable to manage the meeting, the Chairperson can be expected to maintain the focus and commitment to the agenda.
Having the necessary experience in strategic planning and business management gives an individual an advantage over others in a leadership position. The CEO must be adept at providing strategic direction while also being able to motivate others. Being able to manage multiple fronts and vision the company toward its goals is important. The CEO must be able to build coalitions and work with members from every division and across business functions to get the most out of the Board and the corporate budget. As the CEO of a publicly traded company, the CEO has special access to vital information that can be used to make strategic decisions. As well, the CEO is an influential partner in the Board’s operational and monetary processes and he/she plays a key role in keeping the confidence of shareholders and the Board’s capital budget.
The importance of a strong, experienced, and versatile chairperson cannot be overstated. The Chairperson plays a key role in corporate governance and is often called upon to make key decisions that affect the Company’s future success or failure. As such, the Chairperson requires tremendous organizational skills and considerable interpersonal skills to achieve success in his/her position. For this reason, the Chairperson needs to be someone who is highly qualified both in terms of business experience and leadership. The Chairperson should be well versed in business practices, accounting principles, economics, strategic management planning, and public policy.
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