Executive Summary

‘British Boards are well-led, but there is room for improvement’

The quality, integrity, skill and wisdom of UK Board Chairmen is seen to be unimpeachable. However, a comprehensive survey of all FTSE 350 Directors raises question marks over the effectiveness of their contributions to Board performance, effective organisational governance and shareholder accountability. These three concerns offer real opportunities for improved performance.

‘The CEO and Chairman roles converge and conflict’

The evidence suggests that some UK Chairmen may be edging too far towards either adopting a corporate strategic role aligning themselves with, and/or even superseding the CEO, rather than focusing on their key Board leadership responsibilities. The prime area of concern is around corporate vision and strategy; if tension exists here, the performance of the Board as a whole is likely to be affected. Attention needs to be given to supporting Board performance and managing the CEO’s relationship to the Board.

‘Chairman succession is not sufficiently attended to’

Evidence suggests that succession strategy tends to be ill-defined. Board members feel unable to approach Chairmen about the issue.

‘Chairmen are not sufficiently responsive to Board concerns’

There is some evidence of complacency on the part of Chairmen who see their own contribution significantly more favourably than the rest of the Board do. The difference of opinion around contributions may also be contributing to a situation in which Chairmen do not actively seek relevant feedback on their own performance. There may be little or no ‘permission’ given to criticise, for example.

With a lack of poignant feedback in place, any rigorous succession planning for the Chairman himself may likewise become a problem. This is a particular concern when so many (especially of the best performing Chairmen) are in their 60s.

‘Chairman are not being effectively governed’

The relatively new role of the Senior Independent Director (SID) — theoretically to provide a mirror of scrutiny and support to the Chairman on behalf of the Board and to act as court of last resort for shareholders concerns — has not been well-understood or enacted and is thus underutilised at present. In reality, the Chairman determines the role of the SID and confusion around the role of the SID is typically due to the Chairman. The evidence suggests that there is a very real need for a bridge between the Board and the Chairman, especially where Chairmen lean towards a strategic and visionary role, but this role is not yet being fully embraced by the present generation of SIDs.

Taken overall, the research highlights a need for Chairmen to proactively clarify and seek greater accountability for their own contributions and to take a more active role in leading the Board to promote both coherence and performance.

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