Top 5 issues: 5. The high-performing chair
Pressures on boards to navigate difficult short-term economic and financial issues; increasing expectations of shareholders, stakeholders and the wider community; the increasing impact of generational and other changes on the labour market; and fast-moving changes such as AI and quantum computing are very real. So are the tensions in some of our boards. Therefore, chairs performing at the top of their game are now more pivotal than ever. In specialist areas, board committee chairs are also important, leading deeper dives in key areas, supporting management well, and guiding the board’s consideration of these key issues for the organisation.
The role of the chair has never been more demanding. As boards face increased scrutiny and navigate complex challenges, chairs are expected to lead with a strategic mindset and adapt to new realities. Those challenges relate to all the ‘Top five issues for directors for 2025’, and more.
While still being first among equals with other board members, the role is about responding to a rapidly changing environment where expectations on directors have grown. Changing legislation, increased accountability, more active regulators and increasing transparency demanded by shareholders, customers and communities mean that chairs are increasingly having to guide their boards to work through these demands.
Chairs must also foster cohesion, ensure effective decision-making and guide their boards through uncertain times. Yet boards do not always function that well, with 70 per cent of New Zealand directors saying that, unconstrained, they would change at least one member of their board. An even greater proportion of directors believe their boards lack adequate processes and systems to deal with problematic or underperforming board members. Sometimes, the person boards want to change is the chair.
Succession issues that loomed large in 2024 seem set to continue into 2025, putting even more pressure on chairs. They now need to guide boards to consider the required technical skills and, increasingly, the ability of directors to work effectively with an increasingly diverse group of people. Helping to harness this diversity can bring enormous benefits.
Board committee chairs also play a key role with deeper dives into new and complex issues. To be effective, board committees need to be led well by their chairs. In this role, they are as pivotal for the board as the board chair. They will be called on to lead discussions about those key issues at the board table and, therefore, have a wider board leadership role as well.
Strong committee chairs also provide a source of potential successors to board chairs if supported, coached and mentored well. This is another key role for high-performing chairs.
Why it matters
Today, the chair’s role goes well beyond coordinating meetings and managing agendas. Chairs operate in an environment where public trust in institutions is waning, and diverse perspectives around the board table are more common.
As boards bring in members with varied backgrounds, skills and viewpoints, the potential for misunderstanding and conflict can increase. Chairs need to be skilled facilitators, turning those differences into strengths and keeping discussions productive and focused on long-term goals. The ability to manage tensions, while guiding the board towards consensus, is a hallmark of high-performing chairs.
The complexity of the role extends to the nuts and bolts of governance. Chairs oversee an array of committees, advisory boards and working groups, all of which need to be aligned with the organisation’s strategic direction. Balancing these structures without creating silos is a challenge, as is keeping the board’s attention on strategic priorities instead of getting bogged down in day-to-day operations.
A well-structured agenda and smooth coordination are crucial, along with the ability to adjust governance processes to meet the organisation’s needs. This extends to board committee chairs as well.
The chair-CEO relationship is also a critical element of success. It is about finding the right balance between providing oversight and being a strategic partner. This relationship becomes especially important during periods of change, where a strong partnership can ensure strategic shifts are implemented effectively and align with the board’s vision.
Co-chairing models, which are becoming more common across sectors, add another layer of complexity, requiring clear role definitions and a collaborative leadership approach.
High-performing chairs are not defined solely by their experience or seniority. They are defined by their ability to adapt, guide and bring out the best in their boards. The role calls for a leader who can drive continuous improvement, foster a positive board culture, and ensure the board is prepared to tackle future challenges.
Read the companion article by Greg Tomlinson CMInstD, Director
First came the share market crash of the late eighties, then the slow economic cycle of the 90s, the global financial crisis in the 2000s, and the aftermath of the pandemic . . . businesses, like humans, must be resilient.
We can be complacent or conservative, convincing ourselves we are caught in an endless cycle and each crisis will resolve itself, relying on the business ecosystem and society to do what is right. Or we can use each disruption to adapt and make the necessary changes for progress.
The key is to keep moving forward – and that requires strong board leadership. And while it is no doubt harder today to start a business with the added compliance hurdles, the opportunities are far greater. This will keep expanding with disruption, whether in E-commerce, artificial intelligence, or the breakup of monopolies and duopolies, among other factors.
As chairs, and as boards, we should not be frightened to have, and take on, brave aspirations. To achieve this, you need capable teams with diverse skills – the default position of no-to-little risk is the eminent danger to business. Diversity of gender, thought and experience has brought big benefits to business culture and performance.
A chair helps build the right culture, which drives standout businesses – getting this right or wrong determines outcomes, regardless of the profit or not-for-profit status. Culture, like reputation, is hard fought and easily lost. We have a duty to constantly monitor this and not be frightened to address poor culture.
Transformational moves require open and honest relationships between boards, management and stakeholders – no different to any high-achieving sports team. We are proud of our many and varied sporting achievements but less of our business successes.
Boards are going to be faced with multiple challenges as we navigate weakening economies, and the reality of cutting costs with the backdrop of increasing costs of compliance, operating expenses, trade tariffs and our imports on the back of the declining New Zealand dollar.
How do we as chairs and directors add value to shareholders? This requires a disciplined approach to risk and return. While we are all aware of compliance duties, our first obligation is to maintain a sound and profitable business – profit ultimately pays for compliance costs.
Much of the new added compliance is politically motivated and, like governments, subject to change. Strong economies are driven by strong businesses, creating overseas earnings, employing personnel and paying taxes. Businesses either grow or retract but never remain static, so adapting to ever evolving market and customer demands is vital.
Having always been supportive of regulation, the question is, ‘have we gone too far in increasing regulation requirements, and driving businesses to reduce risk’? Health and safety is an obvious area, with ever increasing compliance on the back of increased injuries. No one wishes for accidents, harm or death. Getting this right would add markedly to productivity and quality outcomes.
Normally, performance is a key indicator, but we are experiencing rapidly declining margins in most New Zealand businesses. We all have a role to play, getting back to being productive and rebuilding a future for future generations.
Greg Tomlinson CMInstD is Chair and non-independent, non-executive director of Heartland Group.
Board focus, actions and discussions for 2025
| FOCUS | ACTIONS | DISCUSSION |
| Strategic adaptability |
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| Cohesive board culture |
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| Succession planning and mentorship |
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| Enhanced governance practices |
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