Leadership role of company chairman 'crucial'

The leadership role of a company chairman is absolutely crucial, according to Bob Tricker, a world leading consultant on corporate governance who addressed the second session of the Directors Forum 2010 last week entitled Successful Directors And Effective Boards".

Speaking to The Times Business, Prof. Tricker said that the chairman and directors of a company had a vital role to play in the vision and strategy for their business.

"The board of directors does not micro-manage a company, that is left to the management which runs day-to-day business. The board sees that the company is well run.

"I must stress that the leadership role of the chairman is absolutely crucial," he said. Prof Tricker said each company director is equally responsible for the company and for the overall performance of business. They were also accountable to shareholders, he said.

He also emphasised the importance of non-executive directors sitting on the board, especially if they are independent directors, particularly in family-run businesses which are common in Malta.

"Non-executive directors, especially independent directors, give a different perspective to the business, they are not involved in the day-to-day running of the company and tend to be objective in their outlook," he said.

Prof. Tricker also highlighted the importance of good communication channels between directors and management, which he stressed, were absolutely necessary for a company to be well run, especially if the chairman and CEO were different.

He pointed out that successful directors and effective boards were possible not by simply complying with codes but by fully understanding the important role they had to play in the business.

"The chairman is the leader of the board and he must act like one. The board is responsible for a broad strategy and for the direction of the company, that is why the people who sit on the board are called directors.

"The board also has to understand about strategic risk. Many directors are unaware of exposure to risk, and this was highlighted during the global financial crisis," he said.

Prof. Tricker is the author of the seminal book Corporate Governance - Principles, Policies and Practices. He studied at Oxford University and Harvard Business School, and served on the councils of the institutes of both Chartered Accountants and Chartered Management Accountants in the UK.

Over the years, Prof. Tricker has consulted on strategic and governance issues with many companies, boards and directors, and has contributed to the Institute of Directors' Diploma courses in London, programmes of the Australian Institute of Company Directors, and the Russian/Canadian Corporate Governance Programme in Toronto. The Directors' Forum 2010 is a joint initiative of the Malta Chamber of Commerce, Enterprise and Industry and the Institute of Directors (Malta Branch).