Governance
A Well-Placed Chair
By Laurie Larson
Health care governance expert James E. Orlikoff, president of Orlikoff & Associates, Chicago, talks with Trustee’s senior editor, Laurie Larson, about what he describes as today’s “Holy Grail of Good Governance”—creating a mechanism to define and evaluate the board chair’s role—in other words, a board chair job description.
“Remember, the chair serves the board, not the other way around,” Orlikoff reminds trustees. “A good job description is very useful across the spectrum of board chair work.”
Trustee: Why is a board chair job description so important?
Orlikoff: In the vast majority of boards, the relationship of the chair to the board is based on unspoken assumptions and individual projections. Good boards govern [through] policy, principles and process, not personality. You need a codified job description that outlines the chair’s responsibilities and his or her authority—and that authority should be limited. No individual should lead the board. There should be a clear delineation of roles and an evaluation mechanism. If not, you fall prey to being governed by personality.
Trustee: When is the right time for the board of trustees to create the chair job description?
Orlikoff: It’s best to create it at the beginning or end of the [current] chair’s term, before the next chair is selected … if you have a good chair, you can bring it up with him or her. The [least] ideal time is in a crisis. Board members should try to [have the chair job description] before they need it.
Trustee: How should the board create a chair job description?
Orlikoff: Generating a job description requires that the board has a discussion to tease out and formalize its philosophy of how it interacts with the chair. It’s very individual to each board, unique to its culture. If the board has a self-evaluation process, questions about leadership can be placed into that. Or, if board members talk about leadership succession planning, it can be discussed in that context.
The board should first discuss: “What is our approach to the chair relationship? Let’s look at all the different chairs we’ve had and what we liked and didn’t like about them. What is the ideal relationship with the chair?” That’s the explicit discussion that should be held at a retreat or a special meeting. The discussion becomes very energizing and will generate the job description. From this description, add in the board’s objectives relative to the strategies it is focusing on. These strategies will [then] clarify what the chair should be evaluated on.
Alternatively, the governance committee of the board could make it part of its work plan to come up with the board chair job description and, [from] that, create a chair evaluation. The committee could also make [this work] part of the term renewal process. This is particularly important if no term limits have been set for the chair.
Trustee: What is the purpose of a codified job description for the chair?
Orlikoff: A codified job description serves three purposes: First, it can be used to identify and select the new chair. The board’s functioning varies greatly when a new chair comes in. The board is a blank canvas for the new chair who says, “We’ll do it my way now.” Without a process in place, that’s what happens. It’s a very important conversation to have with board chair candidates. [The job description] says to candidates, “Here’s what we expect you to do and here’s what you must not do.” It allows you to have the discussion up front as opposed to a nightmare later.
Second, it can be used to orient the new chair, [explaining] the role of the board relative to the chair, saying, “We will hold you accountable for the following things.” Nearly 75 percent of hospital chairs have never been oriented to their job. [The description] makes it clear that the chair is accountable to the board and not the other way around.
Third, it can be used for the evaluation of the chair. Whether there are term limits or successive terms are allowed, you need to have a meaningful board chair evaluation pursuant to renewal of their term.
Trustee: Explain the chair evaluation process further.
Orlikoff: Two processes need to be in place. First, there should be a regular chair evaluation [after] each year of a multiyear term, and the evaluation should be based on the job description, with feedback on how to improve [if necessary]. Second, there should be a midterm evaluation [that allows for] removal if the chair is inappropriate. [The evaluation] should provide for midterm counseling or removal if necessary. Don’t wait. When a board says it will “tough out” a chair term—that’s one of the worst things it can do.
Trustee: What should be in every chair job description?
Orlikoff: All board chairs should be good facilitators and be able to run a good meeting, including planning and agenda setting. A good chair can deal with conflict, place his or her own issues on the backburner, be a consensus builder, [respect] confidentiality and be able to address conflict of interest. Also, communication must be good between the chair and the board and the chair and the CEO.
Trustee: What happens without a board chair job description?
Orlikoff: This is more important than ever before because governance is under a microscope, and there is an enhanced perception of personal [board member] liability. Also, the board’s relationship with the CEO is critical and in these challenging times, if you have a bad chair, it’s difficult for the board’s relationship with the CEO. You can’t afford tensions, antagonisms or distractions. The chair is the liaison between the board and the CEO … and it should be clear that the chair is not the CEO’s boss.
Trustee: Why isn’t this practice more prevalent?
Orlikoff: This is the opposite of the way most boards of directors work. Most boards believe intuitively that the chair is the leader and the board is accountable to him or her. I prefer to think of the chair as the facilitator of governance, not the leader.
Fewer than five percent of boards do this now. [In order of prevalence], boards are most likely to do self-evaluations, then board committee evaluations. Less likely are [scheduled] individual trustee evaluations and least of all, evaluating the chair. However, you need all these components; they allow the board to avoid personality-driven governance.
It is fascinating to me that this [board-chair] relationship has been founded on implicit instructions and unspoken expectations and is not discussed. I see a great vacuum here, which for many organizations, is a completely unnecessary problem waiting to happen.
This article 1st appeared in the June 2007 issue of Trustee Magazine.
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