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Home arrow Economics arrow Boards of directors of state-owned enterprises : an overview of national practices.

The role of the Chair

The crucial element in promoting board efficiency and creating an effective board is the chair of the board. It is the chair's task to build an effective team out of a group of individuals. This requires specific skills, including leadership, the capacity to build and motivate teams, the ability to understand different perspectives and approaches, the capacity to diffuse conflicts, diplomacy and personal effectiveness. The chair of the SOE must also interface between the State, the board, and the executive. Its role in liaising with the ownership function is seen as an important channel of communication. Finally the chair must understand the business and ensure compliance with all legal and statutory obligations.

Good practice: The key to the board efficiency is a Chair who can build an effective team by exercising leadership, diplomacy and a deep understanding of the business.

Some jurisdictions highlight the importance of the Chair in board functioning. These are usually reflected in their board guides covering not only the SOE sector but the broader public sector. Depending on the jurisdiction the Chair will fulfill more or less functions. At minimum, the following roles should be assumed by the Chair:

  • • setting the board agenda;
  • • facilitating the flow of information and discussion;
  • • conducting board meetings and other business;
  • • ensuring the board operates effectively;
  • • liaising with and reporting to the minister or ownership function;
  • • reviewing board and organisational performance; and
  • • induction and supporting of board members.

SOE chairs are contributing in new and evolving ways, for instance in enhancing the board composition and selection procedures. First, in some countries chairs are involved in conducting gap analyses of boards (i.e. in determining what board member profiles are required to strengthen the board), and in interviewing candidates to help assess personal and behavioral characteristics. Second, in other cases chairs have the capacity to express reservations regarding nominees and override government proposals based upon an expression of justified concerns.

A final observation is that the role of chair requires a significantly greater contribution in time than that of other board members. Workload needs to be taken into account when considering the accumulation of board roles and in remuneration.

 
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