In the high-stakes world of boardrooms, where decisions can make or break billion-dollar enterprises, the effectiveness of a board often hinges on one pivotal role: the Chair. From Fortune 10 giants to pre-IPO upstarts, a Chair’s ability to lead isn’t just about sitting at the head of the table, it’s about orchestrating the talent around it.

The best Chairs harness the unique skills of each board member, fostering a dynamic mix of decision-making and debate that leads to the best possible outcomes. While some individuals are naturally gifted in leading leaders, the most impactful board Chairs often develop their approach through relentless dedication, agility, accessibility, courage, humility, and integrity.

What Makes a Chair Exceptional?

Insights gathered from The Russell S. Reynolds Jr. Chair of the Year Award process reveal the traits that board members admire most in their Chairs:

1. A Trusted Partner and Coach
   Exceptional Chairs work closely with the CEO and the board, actively participating in strategic planning and monitoring business execution. They don’t just observe; they engage, offering guidance that aligns strategies with the company’s goals.
2. Focusing Time on Tough Strategic Issues
   Great Chairs steer the board’s attention toward complex challenges and risks, prioritizing the tough conversations that drive long-term value. Their leadership shines brightest when navigating uncertainty and inspiring excellence.
3. Master Communicator and Facilitator
   The ability to foster open dialogue and build consensus is key. Top Chairs don’t just facilitate meetings—they cultivate an environment where diverse viewpoints are encouraged, and every director feels heard. This leads to productive discussions and well-informed decisions.
4. Crisis Leadership
   Their strategic acumen, deep understanding of the business, and focus on shareholder value are crucial to guiding the company through turbulence. They remain a steady hand, ensuring that the board stays focused on what matters most.
5. Cultivating Trust and Embracing Diverse Perspectives
   The most revered Chairs create a culture of trust and inclusivity, where diverse opinions aren’t just welcomed—they’re expected. This culture allows the board to explore all angles, pushing past surface-level discussions to uncover the most innovative solutions.
6. Strategic Engagement and Providing an ‘Outside View’
   Great boards are deeply involved in strategy, often acting as a sounding board for management. They challenge the status quo, bringing an external perspective that sharpens strategic thinking. This proactive involvement ensures that the company’s direction benefits from a broader, more diverse set of insights.
7. Big-Picture Mindset and Objectivity
   Effective Chairs are forward-thinking, balancing short-term wins with long-term vision. They steer the board toward critical strategic issues and emerging risks, ensuring that decisions are grounded in a comprehensive understanding of the company’s future.

Over the past few decades, we have seen the best boards have a “leader among leaders” as their Chair as well as stable of other capable and respected Directors who have the universal support to assume the Chair position if the time comes.  In the end, the secret ingredient to Chair effectiveness isn’t just about who they are; it’s about how they lead, inspire, and elevate those around them. We are here to help boards make sure they get it right.

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Brett Stephens is the CEO of RSR Partners and helps lead the firm’s Board & CEO Services. 

RSR Partners is a boutique professional services firm headquartered in Greenwich, CT, that specializes in helping Boards and CEOs with their most critical recruiting, selection, and succession needs. The firm was founded in 1993 by industry icon and Chairman Emeritus, Russell S. Reynolds, Jr. Over the past 30 years, the firm has conducted thousands of projects for Boards and CEOs at public, private equity owned, and family-owned businesses across a range of industries including asset management, consumer markets and enterprises, financial services, healthcare, industrial, marketing and digital, and technology. To learn more about RSR Partners, click here.

In 2022, RSR Partners established the Russell S. Reynolds, Jr. Chair of the Year Award, which annually recognizes a Chair of a public company’s Board of Directors who successfully led the board through significant business or governance challenges. The award celebrates the legacy of one of the search industry’s greatest leaders and icons, Russ Reynolds, who has spent more than 50 years advising boards and CEOs on leadership.

In a striking rebound, the IPO landscape in the Americas has surged this year by over 20% compared to the same timeframe in 2023, with the proceeds from these offerings more than doubling due to the larger size of the deals[1]. This resurgence is led by the healthcare and technology sectors, particularly biotechnology, which alone launched nine deals raising a collective US$1.5 billion. Artificial intelligence (AI) continues to capture the market’s imagination, but investors are increasingly demanding tangible proof of its potential impact. Despite the looming challenges of global geopolitical tensions and the upcoming U.S. presidential election, the robust start to the market and growing investor confidence suggests a promising horizon for public listings, extending beyond large-cap entities to a broader spectrum of companies into 2024-2025.

Drawing on three decades of experience  advising boards and CEOs through complex leadership challenges, we have observed the speed bumps investor-led boards face when transitioning to become more independent. A critical juncture often arrives when financial sponsors perceive a viable route to an IPO. The significance of a board’s capabilities and composition in maximizing a public listing cannot be overstated, yet one of the greatest barriers is often the reluctance of directors to relinquish their positions when it becomes clear that change is necessary. While some boards hesitantly skirt around these issues, the most successful ones embrace a proven pathway to prepare their governance structures for the public markets.

To navigate this transition and effectively prepare for a future IPO, chief executive officers and boards should consider three governance best practices:

1. Board Architecture

The axiom in real estate that “the taller the building, the stronger the foundation needs to be” equally applies to board structure. Recent shifts in corporate governance have redefined board construction to better weather potential challenges. In advance of any public listing, it is essential for boards to address these fundamental governance tenets.

• Vision, Purpose, Strategy: Boards must align their governance framework with the company’s long-term vision.
• Stakeholder Interests Analysis (SIA): Understanding the influence and impact of various stakeholders is now essential for board members.
• Capabilities: It is crucial to identify the skills and experiences needed for directors to effectively govern and guide management.
• Committee Structure: Expanding beyond traditional committees, modern boards might include dedicated groups for risk, finance, climate, digital, or cybersecurity, which in turn demands new directors with this expertise.
• Board Size and Composition: Decisions about the number of directors and the balance between independent and executive members should be made early in the board’s formation.
• Governance Guidelines and By-laws: These should be established early to embed best practices and operational guidelines for board function.

2. Board Leadership

Determining the leadership structure of the board is perhaps the most critical decision post-architecture finalization, influencing the board’s capabilities, effectiveness, and culture:

• Board Chair: Financial sponsored boards typically have the Chair position occupied by an individual connected to the lead ownership group. However, once a path to IPO is in sight, selecting the right Non-Executive or Executive Chairman is paramount to unlocking the full potential of the board and its impact on the company.  
• Committee Chairs: Once a Chairman is identified, selecting committee chairs with the necessary experience and capacity is vital for advancing board objectives and helping the company and board get ready for any pre- and post-IPO governance challenges.

3. Board Recruiting

The current environment for board recruitment is fiercely competitive, with a pressing need for directors who bring diversity of thought, background, and expertise. When adding additional independent directors to the board, we have found it is important to keep the following concepts forefront when building out the rest of the board.

• Value Talent Over Titles: Prioritizing current capabilities over past titles often leads to more effective board compositions, with non-CEO members making substantial contributions.
• Focus on Needs, Not Replacements: It’s important to seek directors who add the needed capabilities for executing the strategy rather than trying to replicate any outgoing director’s contributions.
• Look to the Horizon: Boards need to balance the short term “open seats” on the board with their longer-term director succession needs. Any director added to the board must have the potential to take on additional leadership responsibilities in the future. This is especially true with smaller sized boards with less options for committee chair positions.

By adhering to these best practices, companies who are on the path to an IPO can assemble a board that not only meets today’s challenges but also positions the company for sustained success in the public domain.

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Brett Stephens is the CEO of RSR Partners and helps lead the firm’s Board & CEO Services. 

RSR Partners is a boutique professional services firm headquartered in Greenwich, CT, that specializes in helping Boards and CEOs with their most critical recruiting, selection, and succession needs. The firm was founded in 1993 by industry icon and Chairman Emeritus, Russell S. Reynolds, Jr. Over the past 30 years, the firm has conducted thousands of projects for Boards and CEOs at public, private equity owned, and family-owned businesses across a range of industries including asset management, consumer markets and enterprises, financial services, healthcare, industrial, marketing and digital, and technology. To learn more about RSR Partners, click here.

[1] Data provided by EY Private.

Dear Clients and Friends,

As we reflect on 2023 and consider the possibilities for 2024, our Board Practice extends our heartfelt gratitude for your ongoing trust and support. It has been a dynamic and transformative year for the corporate landscape, and we are delighted to have navigated it alongside you. Leadership in the boardroom and C-Suite is simply indispensable.

In 2023 we initiated the Russell S. Reynolds, Jr. Chairman of the Year Award. The Chair of the Year Award was established to celebrate the legacy of one of the search industry’s greatest leaders and icons, Russ Reynolds, who has spent more than 50 years advising boards and CEOs on leadership. The award recognizes a Chair who successfully led a public company Board of Directors through significant business or governance challenges. As featured in Fortune magazine, the inaugural award was presented to Sarah Nash, Chair of Bath & Body Works, at our annual Directors Dinner in New York in October. Sarah demonstrated remarkable leadership juggling a spin-out of Victoria’s Secret, managing a CEO succession, handling activists as well as other business challenges all seemingly simultaneously. We were delighted to recognize her extraordinary governance and business guidance. We hope that many of you will join us for next year’s Directors Dinner and Chair of the Year Award.

Throughout 2023, the RSR Board Practice continued to act as the heart of our firm, not only assisting a wide range of clients with their critical governance related needs, but also informing and distinguishing our executive recruiting efforts. As we reflect on the coming year, we have several thoughts on governance issues that we expect to be at top of mind in boardrooms in 2024:

• Alignment of board culture, a learning mindset, and diversity of opinions are now more important than ever on boards as companies face geopolitical risks. The world has changed and what worked in the past will not work in the future. It is therefore more important than ever to perform a robust and comprehensive board competencies gap analysis. It also might be worth establishing a committee or an advisory committee to focus on geopolitical risks.
• Risk governance requires boards to focus not only on current urgent risks, but to also more carefully consider low probability or unknown risks that may have enormous impact on the business. There have been too many “Black Swan” events emerging, and as a result, boards need to do more creative scenario planning.
• Perform a board culture audit. Does the board foster an environment of intellectual curiosity, and an open and constructive dialogue without limiting different viewpoints or alienating members? Should the board have more executive sessions? Having the right culture is the foundational element of a high-performing board.
• Don’t be left behind on AI. The NACD recently reported on the acceleration of science, technology and/or innovation committees formed at the board level, noting that 67 Fortune 500 companies now have one or more of these committees.. Does your board have the skillsets in existing directors to understand generative AI, emerging/disruptive technologies, and cyber risk? Or should new directors join the board to help meet these challenges? Does your board understand and have the proper governance structure to oversee the company’s generative AI efforts?
• Improve board evaluations, including board and committee leadership, and individual directors. The Universal Proxy Card will be used in proxy contests to target the performance of individual directors. It is important to establish action plans and accountability. Evaluations can help boards plan for succession and recruit to fill gaps in skills and experience.
• Activism will increase in 2024. Is your board prepared? Do you have the right advisors?
• A new risk has emerged – 74% of executives surveyed by Mercer (Global Talent Trends report) stated that the majority of their workforce cannot adapt to the new world of work. People are the key source of competitive advantage and value creation – it is critical to know in what environments employees are productive and feel appreciated.
• Increased board and committee oversight of human capital management is required, especially in light of the new SEC disclosure rules coming in 2024.
• Lastly, board burnout is real. Time demands on directors have increased substantially. Be mindful of the capacity of directors and their ability to absorb board communications and information, as well as time allocated to meetings.

We look forward to continuing to assist our clients with their most important, complex, and sensitive leadership and governance concerns in 2024. We believe that RSR Partners is uniquely situated in the industry to provide unparalleled access to and insight into top-performing business leaders. In addition to our board recruiting capabilities, we offer our clients a broad set of other Board and CEO services. Should you have any important board or C-Suite leadership needs in the coming year, we would be delighted to share our insight and expertise to help you. More importantly, we look forward to our continued friendship with you all. 

This article was originally published by Savoy Magazine.

How access delivers results

Successfully recruiting diversity to the boardroom requires a customized search strategy that boutique search firms are uniquely positioned to offer. In my decades advising executives on their most important talent needs, I can attest to the enhanced value diversity brings to the boardroom dynamic. Nevertheless, organizations still struggle to get this right – despite best intentions – and the consequences of inadequate results can have long-lasting impacts on a board’s culture and ability to influence and effectuate.

The reality is that high demand for diversity talent requires boards to partner with a search firm that can genuinely represent them in a very crowded market. Understanding a few key decision points can help those responsible for board composition make informed decisions regarding which firm to select.

What constitutes a qualified candidate is inherently debatable, but this should be the first point addressed with a search firm. Traditionally, board candidates are current or retired CEOs, CFOs, GCs, and major business/division leaders on executive leadership teams. This is a safe, proven path. However, not only is it impassable for most candidates given the paucity of openings, but it perpetuates diversity disparities – a well-explored topic.

An alternative approach is to partner with a search firm to build a board succession plan based on an assessment of competencies. This allows boards to anticipate their makeup and cultivate talent to supplant needs while simultaneously solving for diversity. Succession planning requires a deep dive into the board, which means the firm must possess capacity, discipline, and diplomacy. This process fosters a trusted relationship between the board and firm, and boutique firms purposefully limit the number of their engagements to ensure this high level of accountability and client service.

Since pipelining talent alone is rarely sufficient to achieve diversity, search firms that gain a board’s trust to explore untraditional profiles can expediate the process. Executives with the expertise and perspective that can be additive, such as human resources, ESG, information technology or digital experts, commercial, and purchasing/supply chain leaders, are often overlooked as qualified candidates. Rarely will the “usual suspects” bring distinctiveness in these areas. Boards should also leverage the practical knowledge of indirect reports to the CEO, such as SVPs at large-cap companies, especially for mid or small-cap opportunities.

Board capacity, conflicts of interest, and schedules can dramatically reduce a slate. Untapped, qualified diverse candidates are becoming more sought-after. Therefore, the more boards a search firm is committed to at one time, especially when engaged to search for similar profiles, the more each client must analyze where they stand in the firm’s pecking-order. Boutique firms are unlikely to be searching for similar candidate profiles at the same time and can present clients with unrestricted access to a slate.

Finally, how a search firm approaches the candidate and characterizes the personality of the board can greatly impact the candidate’s interest. Without a deep understanding of the board’s intrinsic nature and strategy to enhance its expertise and perspective, missteps happen. Approaching high-impact candidates is a combination of art and science. Recruiters should develop an extensive appreciation of the candidates’ experience, expertise, character, and interests and articulate clearly how the candidate aligns with the profile and impacts the board. Boutique firms that put candidate care high on their value statement and possess the bandwidth and emotional intelligence to cultivate candidates will be more convincing.

In short, the bureaucracy and oversight that can thwart the success of recruiting diversity to a board are often absent in boutique search firms. On a topic this important, hold your search firm to a higher standard.

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Eric Douglas Keene is a Managing Director in the Board & CEO Services practice at RSR Partners and the founder of Keene Advisory Group. He has extensive experience recruiting a diverse range of senior executives to C-Suite level roles and to boards of directors.

RSR Partners is a boutique professional services firm headquartered in Greenwich, CT, that specializes in helping Boards and CEOs with their most critical recruiting, selection, and succession needs. The firm was founded in 1994 by industry icon, Russell S. Reynolds, Jr. The firm has conducted thousands of projects for Boards and CEOs at public, private equity backed, and family-owned businesses across a range of industries including asset management, consumer goods and services, industrial, technology, and healthcare. To learn more about RSR Partners, click here.