Why the board chair gets paid more

A good chairperson is supposed to summarise the arguments for and against and try to achieve a consensus by distilling what the irreducible minimums are for the issue to either succeed or fail. FILE PHOTO | SHUTTERSTOCK

   By CAROL MUSYOKA  

A recruiter asks a candidate, "Why did you leave your last job?"

The applicant replied, "It was something my boss said."

"What did your boss say?" asked the recruiter.

"You're fired."

A seasoned chairman of a board recently shared his experience with me for educational purposes. I concluded the experience as a typical case of a 'Chairman’s Dilemma'. Let us call him Daudi.

Daudi was appointed to the board of an organisation in which a childhood friend of his, William, was a senior manager.

Upon appointment, the CEO brought to his attention that William was about to be fired for non-performance. Daudi prevailed upon the CEO to give William a second chance and was put on a performance improvement plan thereafter.

Five years later, William had relapsed to his default factory settings of non-performance. He was put through a disciplinary process and the conclusion was to terminate his contract.

However, the HR policies of the organisation allowed for an appeal to be made to the chairman of the board where a senior manager had unsuccessfully gone through the disciplinary process.

William, not one to let a loose straw slip through his clutching fingers, made the appeal. Daudi has now put in a quintessential quandary. Intervening once again would put his credibility as an independent arbiter into question.

Not intervening would put him under inordinate pressure from William’s family to look after their “son” and his “brother”.

By this time, Daudi was quite well respected within the board and his tenure of chairmanship had been scandal-free.

After great consideration, it came down to a choice between his professional reputation and his personal connections.

The former carried the day. Daudi informed William that he was conflicted and could therefore not listen to the appeal. William was fired.

People often ask why board chairpersons get paid more than ordinary directors.

Read: The board chairperson that chose to just jump

The reasons are quite simple. Board chairs spend more time in the organisation working with the CEO to meet stakeholders, preparing for board meetings and other board-related general administrative tasks.

Furthermore, board chairpersons exercise the emotional intelligence muscle far more often than ordinary directors, a muscle that is extremely load-bearing with a high tensile strength required.

One example can be seen during board meetings where an emotive point is consuming great debate and a decision needs to be reached.

A good chairperson is supposed to summarise the arguments for and against and try to achieve a consensus by distilling what the irreducible minimums are for the issue to either succeed or fail.

But remember that the chairperson is a director too, and has an opinion on the matter. The chair can therefore take the (more responsible) role of an arbiter and build consensus to either pass the motion through or send it back to management to fix whatever issue that will make it passable by the board at the next meeting.

Or the chair can become a protagonist and try to push the issue and the debate in the direction that her opinion is aligned to.

This is a very slippery path to embark on as it will engender deep mistrust from directors for any future discussions that will take place on the board.

The wily chairperson will have anticipated rabid debate on an issue beforehand, particularly since the chairperson should always meet with the CEO before every board meeting to go through the agenda and determine any potential landmines that may be buried therein.

Having spotted the landmine, the wily chairperson will have aligned key directors before the board meeting to the outcome he wishes to emerge.

Read: Should board chair be the cop?

Who are the key directors you ask? The ones who can sway the opinion of the other directors. Another chairman shared with me the story of a committee chairperson who was unable to build consensus in her committee on a critical decision.

Unhappy with the meeting deliberations, both the CEO and a committee member approached the board chairman to complain that the committee chairperson had tried to push through her own agenda and decision outcome but had failed.

At the main board meeting, when the agenda got to reports from committees, the committee chairperson gave a summary of their meeting and then asked the board to discuss the contentious issue.

The wise chairman could see what the committee chairperson was trying to do. A good board chairperson is less of a technical expert and more of a consummate diplomat, backroom negotiator, consensus builder and landmine spotter all rolled up in one cool, calm cucumber. That’s why they get paid more!