Vanessa Moon, Director at Moon Consulting, works alongside a wide range of UK companies from start-ups, owner managed SMEs and FTSE listed business. She focusses on Board, Non Exec and Chair appointments.
Vanessa welcomes you to the fourth article in our 'Top Tips' series featuring the insight of a variety of successful business leaders. For this article featuring the top tips from leading Chairpersons, Vanessa has conducted a series of in depth interviews with the following people looking at their advice for a newly appointed Chair.
Our interviewees were:
Theresa Wallis - Theresa is Non-Executive Chair of LiDCO Group PLC, where she chairs the Group's Remuneration, Audit and Nomination Committees. Since 2001, Theresa has held a number of non-executive directorships and she is currently a non-executive director of Special Products Limited and the Quoted Companies Alliance.
Peter Rilett - Peter is Chair of the North Bristol NHS Trust Board, and a Non-Executive Director for Watts of Lydney and Centaur Services. He is also on the Boards of St Monica Trust, Business West and was Master of the Society of Merchant Venturers for 2012/13 and is now their Chair of Education. Previously, Peter was Senior Partner with KPMG Bristol office.
From her meetings, Vanessa has drawn together the main top tips as follows;
1. Effective Listening & Communication with the CEO: As Chair, you will be working closely with the CEO, so it is important to establish a good relationship with them. Theresa Wallis recommends having a weekly meeting or call, driven by the Chair. She recommends making a list of what needs to be discussed, having a purpose, being a support and providing advice as well as insisting on a 'no surprises culture'. Stephen Robertson adds he is a strong advocate of, 'The 7 habits of highly effective people' - Habit 5 is 'Seek first to understand, then to be understood'. Stephen suggests a Chair should look at what areas of support would help the CEO and what the overall strategy and direction is. This direction will change depending on sector and regulatory environment and whether the company is listed, a not for profit, or within the education sector for example.
2. Know Your Market by Meeting Key Customers & Clients: Stephen and Peter felt that it is important to meet your customers and suppliers, and that this should include internal stakeholders as they are sometimes overlooked. This can help you gauge where the business is going. Peter Rilett advised that you should look at your main competitors, undertaking a SWOT analysis as this can help you form a balanced opinion and helps analyse your market position effectively. All our Chair contacts talked about strategy, milestones, financial reporting, and if the business is listed, the stock market element and applicable corporate governance standards.
3. Clarity: Theresa raised the subject of the importance of an effective induction for a Chairperson and to ensure they are aware that they hold no individual executive power. She said it is absolutely essential to have a clear division of responsibilities between the Chair and the CEO, whereby the Chair runs the board and the CEO runs the business day-to-day. The Chair should let the CEO lead (if they are the right person to lead). Theresa also believes it is the responsibility of the Chair to ensure an effective induction for all Directors and that the other Non-Executive Directors understand the nature of their roles and what they are expected to contribute - this ultimately helps Executives and Non-Executives operate effectively by understand each other's remits and their respective boundaries.
4. Planning& Looking Ahead: Theresa said it is also important for a Chair to have an agenda for the whole year as a map which addresses all aspects of the business from strategy, monitoring performance and the cycle of activities from budgets, operating plan and year-end reporting. In addition to this, the Chair has to plan for the AGM, oversight of investor relations and compliance with regulatory requirements, so each agenda should be a sensible length which can be adapted, but it is critical to have that initial plan. The Chair must also regularly review and plan the composition of the board, so that people with the right skill sets and experience relevant to the company are in post. Stephen always asks himself for example, 'what does 'good' look like?' He suggests having conversations with external stakeholders and shareholders to gain clarity of vision and transparency so you know what the key deliverables are for the business. The timing of these deliverables can vary from the first 30 to first 100 days and the climate could vary again if a listed or regulated environment. If listed there are key guidelines and milestones on deliverables.
5. Understanding & Using Networking: Stephen believes that networking should apply not only to the Chair but all the board and non-exec team, to leverage contacts properly. He also suggests that your business contacts should be used wherever possible (and appropriate) to help solve a problem, and so a Chair must work at developing that confidential support network. This could be competitors, people in similar industries or head hunters such as Moon Consulting, as they all will have a wealth of contacts and knowledge. A Chair should strive to gain an external perspective on the business as this can help with due diligence and potential ongoing business issues. So, whilst perception can often be overlooked, it has huge benefits in identifying what are your businesses USP's are against your competitors, for example. Theresa points out that there is a wealth of helpful information readily available via organisations such as the Quoted Companies Alliance (QCA), as well as from advisory firms such as law firms. If your company is a member of the QCA you can get access to free guides and seminars and the QCA has its own corporate governance code for small and mid-size companies. The Institute of Directors also run helpful training courses that can support.
6. Financials: The final point is raised from Peter Rilett and focuses on having a fresh look at margins in your business as a Chair. He suggests that a Chair should be able to assess if the allocation of costs feel right and what really makes the money in the business. The Chair should ask, 'Are the products market priced or cost plus? What is the market share and what is the price elasticity?' Peter has seen businesses overly focus on a new product or innovation without adequate regard to margin and profitability. As an Accountant by background, Peter says a Chair should always look beyond year end and ahead in 1, 5 and 10 year cycles.
So, in summary Vanessa comments, 'all our participants clearly take their Chair roles very seriously and they make sure they have the time for the role in question. They readily understand the governance and fiduciary requirements and work with the whole business in order for it to flourish and grow. It is also clear that it is helpful for a Chair embarking on their first appointment to have been a Non-Executive Director beforehand to truly understand the Board dynamics. I would conclude from my conversations, that a strong Chair understands their business in detail, fosters strong internal and external relationships and is not afraid to leverage contacts for advice and support and put themselves in front of their customers.'
Moon has a long history of working with business, recruiting Chair roles with a range of businesses, from listed, Private Equity backed to family and not for profit. For further details about our services see www.moonconsulting.co.uk
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