Chapter Eight: Why Boards Fail pg 132

1. Failures of Leadership
Quality of board leadership is undoubtedly the most critical of the key factors
determining board success or failure, so much that the problem of, and solution to,
board underperformance can be traced almost always to a failure or leadership.
As first among equals and the key link between the directors, shareholders and
management, the chairman impacts heavily on the functioning of the board. As the
primary planner and manager of the boards work, and leader of discussion at
board and shareholder meetings, the chairman sets the tone, style, and pace. In
attitude, manner, commitment, wisdom, judgment, social skills, integrity, and
work capacity, he or she inevitably provides a model for all other directors.
While all directors are equally responsible for the duties of the board, their
contributions are magnified or diminished depending on the chairman. It is no
understatement to say that the leadership ability and performance of the chairman is
the most significant determinant of the success and failure of any board.
Chapter 9 BOARD LEADERSHIP: The job of the Chairman pg 146
THE CHAIRMAN HAS ULTIMATE RESPONSIBILITY
Deriving from the firm principle that the boards role is supervisory, with operations
delegated to management, the person with the ultimate formal authority and
responsibility for overseeing the management of any company is the chairman, not
the CEO. This is so because the legal governing body of all corporations is the board,
and its chairman is the person who, by appointment or election by the directors,
presides over the board and through it, the company. The CEO is essentially a
creature of, and reports to the board.
It is the chairman who has the most influence on how effectively the board operates
and whether it works as whet we term an old style board (perfunctory, superficial,
and impotent) or as a new style board (vigorous, creative and empowered). The
chairman therefore has a major influence on the relationship that develops between
the board and CEO
If, then, as reported daily in the media the performance and competitive ability of
many North American companies is unsatisfactory, who should be held accountable?
If, as many outsiders and informed observers contend, boards are seriously
underperforming, who bears the ultimate responsibility? If, as many argue, corporate
performance and board effectiveness need to be greatly improved, who must take the
initiative? Clearly, the Chairman. As water will not rise higher than its source, so in
a corporation the quality of governance will not be better than the quality of the
chairman.