Everything rises and falls on leadership. This is an axiom the veracity of which can be documented throughout millennia and is being demonstrated every day as we navigate a global pandemic that has affected our lives, our economies and almost every corner of this world.
None of us would have expected that a microscopic virus could cause a world-wide chaos that to date has claimed millions of lives with over 218 million confirmed cases of Covid-19 worldwide. The global economy has been in a self-induced coma and the fallout from the pandemic will be felt for decades to come.
If we have learned anything during this crisis, it is this: Leadership matters! It matters a great deal. The character and strength of a leader becomes evident during challenging times. The Greek philosopher Epictetus said: “The greater the difficulty, the more glory in surmounting it. Skillful pilots gain their reputation from storms and tempests.”
We have seen countries led by “skillful pilots” that have fared quite well during this crisis. The same skill is required in the corporate world as we lead and govern the organisations for which we are responsible. To that end, I will focus in this article on the roles and responsibilities of the board, chair, and CEO.
East African countries tend to follow the UK unitary board model where we have a single board in which all the directors have responsibility to manage the operations of the company. This board consist of executive and non-executive directors and usually there is no distinction between the roles of the directors. The board is generally chaired by an independent non-executive director. From my personal experience with various governance structures in Europe, the US and Africa, I support the split roles of chair and CEO and will focus the remainder of this article on the roles and responsibilities of the board, the chair and CEO as well as touch on the key issues boards are grappling with.
The board has ultimate responsibility for the enterprise and must be independent from management and provide the company with direction, oversight and advice. Additionally, the board must have moral authority to lead the enterprise and act in the best interest of the company.
While the board is appointed by the shareholders, its primary obligation is to do what is best for the company, while being mindful of and skilfully managing the needs of all stakeholders. In leading the enterprise, the board will set the strategy, define the company’s risk appetite, ensure the right people are in the right chairs at the right time and shape and own the culture. From experience, the people issues, such as succession planning, are often the most challenging and require Solomonic wisdom.
When setting the strategy, the board needs to understand why some companies thrive in uncertainty, even chaos, and others do not, and then take brave decisions to ensure that the enterprise will prosper, even in challenging times.
Jim Collins in his seminal book Great by Choice said that great companies all exhibit three core behaviours and Level Five leadership as follows: Fanatical discipline, empirical creativity; and productive paranoia. A Level Five leader builds enduring greatness through a paradoxical combination of personal humility and professional will.
At LeasePlan Corporation where I serve on the Supervisory Board we say: “You cannot grow businesses; you can only grow great people who then grow great businesses.”
Cultivating leaders characterised by confident humility is a major challenge for any board. The key issues that keep me awake at night as a chair and board director are: Do we have the right people in the right roles at this time? Do we have a clear business strategy that is properly technology enabled? and: Do we have a learning and innovation culture that enables us to pivot in this fluid environment?
Meanwhile, an effective chair sets a progressive board agenda, ensuring that at least 60 percent of the board time is used to address forward-looking, strategic matters; is the closest adviser to the CEO; knows the strengths of all the board members and skilfully teases out the contribution of each director; and ensures the board is a robust, effective, social, visionary leadership team.
A good CEO will put the company first and lead with “Level 5 Ambition” as defined by Jim Collins. He/she will lead the company with humility and professional competence; define and refine the vision, mission and strategy of the enterprise; work well with the chair and the board; and build competent diverse teams. The CEO generally serves as an executive director on the board.
Dr Herta von Stiegel, author, board member, former investment banker and the Executive Chair of Ariya Capital is the co-Founder and former chair of Women Corporate Directors Kenya