ACROSS THE POND
The balance
of power
David W Anderson, President, The Anderson Governance Group
In my previous column, I raised a red flag on the
Walker Report’s recommendation to make board
chairs essentially serve full-time, as this dramatic
shift in the chair’s role poses a number of risks.
Several readers agree. Indeed, the chair of a multi-
billion dollar US company commented: ‘This creates
two chief executives: why would I spend all my time
as a chair if I am not actually going to run the place?’
A Canadian chief executive said: ‘We just spent a
decade trying to get the governance split between
non-executive chair and chief executive sorted
out. This does more harm for the credibility of
governance than almost any other action I’ve seen.’
The irony is that clearly separating the chair
and chief executive roles was the solution to role
conflation and the resulting lack of accountability –
which I call the ‘accountability trap’. Seeing the UK
flirting with the same accountability trap, but from
the other direction, is frustrating in that it suggests
the key lesson was not learned. Given this risk,
and the tendency for UK innovation in governance
to influence developments elsewhere, how can we
achieve the desired and appropriate effect intended
by Walker, without the new risks of a ‘super-chair’?
Recall Walker’s ultimate goal: to create more
effective boards to counter the risk of unaccountable
management. His strategic path to effectiveness
is the further rebalancing of power away from
management to boards – continuing a trend of
strengthening the hand of directors to enact good
governance, and reducing the traditional influence
of managers. The tactic of creating a super-chair
seeks to ensure the board has the means and
individual locus of control to use this new power.
If the Walker Report’s recommendations are
implemented in full – including its many positive
provisions – directors, executives and regulators
must recognise that this new model also modifies
by implication other roles, not just that of the
chair. An explicit process should be undertaken
to recognise this new dynamic and establish or
reassert the purpose, authorities and expected
interactions of all leadership roles.
Explicit governance principles – such as
independence, accountability, alignment and
complementarity of roles – must be defined
and agreed to allow the board to adjudicate the
appropriate balance of power both within the
board and between the board and management.
Once established, directors need to apply these
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principles in the context of the strategic needs of
the organisation, the relative competencies of the
board and management, their relative commitment
of time and resources, and the relative degree
of trust and confidence in management – and
high-level job descriptions should be reworked to
reflect those principles. These might include, for
the chair, an explanation of the role as the leader
of the board, and responsibilities for working with
and coordinating both committee chairs and the
chief executive in setting the board’s agenda, as
well as provisioning directors with appropriate
information and resources to formulate risk-
calibrated strategy, understanding organisational
How can we achieve our aims without the
risks of a new ‘super-chair’ role?
health and performance, and making decisions
to advance the organisational purpose. The chief
executive, meanwhile, should be identified as the
leader of management, singularly accountable to
the board for the development and performance of
the management team and overall organisational
health. The chief executive is responsible for
coordinating with the chair to ensure the
governance needs of the board are understood,
supported and met by the management team.
To further mitigate potential risks of a power
imbalance, board committees and their chairs
should revisit their mandates and assess the value
they bring to board discussions. Committees and
individual directors alike should consider and
articulate how best they can engage the board, each
other, the chair and management. The governance or
nomination committee has a vital role to play here.
These undertakings are advisable, and will help
to achieve the sought after power-rebalancing
even without creating a super-chair. Boards do
not need a vastly more powerful chair setting up a
power play with the chief executive. Boards need
clear governance principles to guide directors in ABOUT THE AUTHOR
effective execution of a robust governance mandate, David Anderson MBA PhD ICD.D is the
and competent directors led by a skilled chair to President of The Anderson Governance
operationalise those principles. This will deliver Group based in Toronto. He can be reached
the desired objectives of reform while avoiding at david.anderson@taggra.com and
+1 (416) 815 1212.
deleterious, unanticipated consequences.