This week, we delve into the interconnectedness among the Board, CEO, and Chair within the corporate governance setting of an organization. The distinct roles of the Board of Directors signify its strategic, guiding, and supervisory functions in managing an organization. In Kenya, we adhere to the unitary board system, comprising the Chair, independent non-executive directors, and typically, the CEO.

The role of the Chair holds utmost significance, symbolizing the pinnacle of governance within an organization. In a unitary board system, the Chair represents the organization, not just the Board, emphasizing their duty to serve the organization rather than merely being a ceremonial figure. They ought to lead effectively, coordinating the wealth of expertise and experience among the directors to guide management. The Chair also acts as the CEO’s chief confidant, and when they complement each other well, they form a robust team, positively influencing board and corporate culture.

The relationship between the Board and the CEO is defined within various governance frameworks and codes, encompassing the Board’s responsibility in recruitment, defining authority limits, and providing feedback and appropriate compensation. Meanwhile, the CEO’s role involves leading management, upholding the company vision, and establishing administrative structures to execute the laid-out strategy.

Notably, the dynamics between a Chair and CEO have evolved. In North America, it’s not uncommon for one individual to hold both roles, or for a CEO to transition to the Chair position. With clearly defined roles of the Chair and CEO, a successful pairing of likeminded and conscientious individuals can be beneficial for the organization’s success, as they represent the public face of the company and jointly shoulder its triumphs or setbacks. However, it is crucial to maintain the independence of these offices, as the Chair should not be involved in the day-to-day operations but should stand ready to step in if the CEO departs suddenly. As well, the separation allows for checks and balances both ways, which if done well, provides a good base of feedback given through for board evaluations to improve either office. In the two-tier system, where there is a management and a supervisory board (mostly in continental Europe) the CEO and chairman have the additional responsibility of ensuring that the supervisory and management boards communicate and interact productively.

Governance isn’t a linear concept, but with the right approach, achieving the proper balance becomes attainable.

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