What can a Chairperson bring to your business?
Getting the right Chairperson into the businesses we back is vital. It isn’t just about their business experience; it is also about their ability to develop and manage relationships with the operational board and the differing stakeholders.
Being a CEO can be a very lonely place and the Chairperson, as well as providing challenge and commercial rigour to the board room, needs to provide support and advice and act as a buffer between the stakeholders and the CEO.
A Chair role can vary markedly. For example, a private equity Chair is very different to that in a PLC, they need to help the team focus on the right priorities and ensure that there is a well thought through, coherent strategy in place. Board meetings tend to focus on a small number of key strategic goals rather than dealing with corporate governance issues. Unlike publicly listed businesses, private equity backed businesses have their investor on the Board, it is therefore imperative that the Chair has the trust of both. This is a delicate balancing act to get right.
“A Chair brings perspective and a broad set of experiences with which to support the board team - it’s often around help with situations that are new to management - the Chair is also key in facilitating open communication between PE investors and executives.” James Browning, Chair of Darts Corner and Commhoist
From our perspective as an investor, when we appoint a Chair, which we do on all investments, rather than force our preferred candidate on a Chief Executive, we identify an individual together and the CEO will spend time getting to know the candidate and ensuring the chemistry is right. The appointment needs to be a joint decision, or that confidence and two-way trust is unlikely to develop. There is no value in a management team feeling that a Chair has been imposed on them. It is easy to see when we have got it right and the CEO genuinely values the relationship and feels comfortable discussing things freely with the Chair.
Mark Lawson-Jones, Partner at Page Executive and experienced Non-Executive recruiter echoes this sentiment and comments that “despite a Chair position not being a full-time role, the selection and appointment process should be treated with the same rigour as hiring a full-time Board member. It means dedicating the time to understand the issues and challenges the business faces and being clear about what the Chair will advise. Document the skills, experience level, e.g. is this a first Chair role or needs proven experience, and the type of personality required. Finally, it is imperative to conduct a thorough search and assessment of the Chair candidate market to compare and appoint the best Chair for the business, not the best Chair available.”
Typically Chair people that are appointed by our portfolio businesses have situational experience rather than sector experience, although that can be important in niche industries or highly regulated markets. For example, if we are looking to expand a business into new geographical markets we would look for someone who has that experience in their locker, understands the potential pitfalls and are able to guide a management team through it. Moreover, we whole heartedly believe that the management teams we back are the experts in their sectors and adding another person with the same experience wouldn’t necessarily add any value. For example, the team at TIS, a leading provider of design, installation and maintenance of communications, access, fire and security systems are experts in their market and a sector focused Chair was unlikely to have added any value, however someone who has experience of acquiring businesses, building maintenance revenue streams and managing exponential growth will add significant value and support their growth strategy.
“Apart from supporting the CEO and the board, the Chair’s role is to ensure that the business has a strategy, a team to deliver the strategy, and the team have the resources needed to deliver the strategy.” Ted Goold, Chair of TIS.
Appointing the right Chair is easier said than done. There is no shortage of people who would like to chair a private equity-backed business. But the number of potential candidates who have the relevant experience, high levels of EQ and interpersonal skills, as well as the business nous and the ability to contribute to the strategic debate is far smaller.
Nonetheless, we feel putting in the hours to find someone suitable is worth the effort - the right Chairperson can help make the difference between a good investment and an outstanding one and we’re certain it can have the same impact on your business.
If you would like to find out more about becoming a Chair or are a business owner who is considering appointing a Chairperson, please feel free to get in touch with one of our team for a chat.