Chair’s discretionary capability to promote board effectiveness through boardroom diversity

Rita Goyal, Andrew Kakabadse , Nada Kakabadse

Research output: Contribution to conferencePaper

Abstract

The paper explores the role of the Chair in a self-regulatory governance regime, to promote effectiveness with the help of board diversity. The paper is based on a qualitative study conducted by interviewing forty-two board Chairs, Directors and Chief Executives. We find that for effective boards the most significant attribute of diversity on boards is the diversity of perspective. Also, due to a breadth of discretion available to them, Chairpersons exercise a substantial influence in promoting board effectiveness by encouraging board diversity. Effective Chairs evaluate the requirement of competencies on their boards, obtain them by nominating directors with diverse capabilities/experiences, and also resolve diversity-led conflict exercising their discretionary authority. The study also presents the attributes of an enlightened Chair who has a long-term/value-based approach, and is welcoming of board diversity.

The paper contributes to the application of the Leadership Discretion perspective by presenting the evidence of a range of discretion exercised by UK Chairpersons for promoting effectiveness. The paper also contributes to the application of Strategic Leadership theory (Finkelstein et al., 2009) which suggests that the board leaders’ decision making is impacted by their background, values and experiences. The findings of the paper also contribute to the enlightened leadership perspective (Sharma, 1995) by drawing a parallel between an enlightened leader and effective chair. The paper also adds to the limited academic literature on the role of the Chair in encouraging board diversity. The study broadens the meaning of board diversity and defines it with reference to perspective rather than demographic attributes. Thus the paper makes an original and significant contribution to the academic literature on board diversity. Moreover, the study presents the views of board Chairs and Directors, who are often reticent to share their perspective on topical and important subjects of board diversity, effectiveness and the role of the Chair. The study may help corporate practices in composing more effective boards by obtaining diverse perspectives with the help of effective Chairpersons. It may also help policy formulation on diversity promotion in boards for improved corporate governance.

Conference

ConferenceThird conference of the International Corporate Governance Society
Abbreviated titleICGS
CountryItaly
CityRome
Period2/09/173/09/17
Internet address

Keywords

  • Board Chair
  • FTSE Boards
  • Board effectiveness
  • Board diversity
  • Discretionary theory

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  • Cite this

    Goyal, R., Kakabadse , A., & Kakabadse, N. (2017). Chair’s discretionary capability to promote board effectiveness through boardroom diversity. Paper presented at Third conference of the International Corporate Governance Society, Rome, Italy.