What Makes an Outstanding Chairman? Findings from the UK Non‐Executive Director of the Year Awards, 2006

• Date: 01 November 2007
• Author: Bernard Taylor,Keith Gay,Victor Dulewicz
• Published date: 01 November 2007
• DOI: http://doi.org/10.1111/j.1467-8683.2007.00630.x

What Makes an Outstanding

Chairman? Findings from the UK

Non-Executive Director of the Year

Awards, 2006

Victor Dulewicz*, Keith Gay and Bernard Taylor

This paper reports research conducted on detailed behavioural information from the UK

Non-Executive Director (NED) Awards 2006. The key f‌indings were that outstanding Chair-

men have a high level of integrity, showing high ethical standards in their own behaviour, as

well as providing a lead on corporate governance matters. They promote investors’ conf‌idence

and ensure high returns to investors. They spend signif‌icant time mentoring, developing and

advising their colleagues, are team builders, are empathetic and very effective. They encourage

contributions from fellow directors and achieve consensus yet they challenge and probe

colleagues, especially the executive directors. They have an acute critical faculty and a critical

thinking ability.

Keywords: Outstanding chairman, chairmen’s competencies, non-executive director, NED

awards 2006

Introduction

Over the past decade a series of public

reports – Cadbury (1992), Greenbury

(1995), Hampel (1998), Turnbull (1999), Smith

(2003) and Higgs (2003) – def‌ined in some

detail the role of the Non-Executive Director

(NED) in the UK. The recommendations made

by these reports were implemented through a

series of codes issued by the UK’s Financial

Reporting Council (FRC), compliance with

which was made a requirement for listing on

the London Stock Exchange. The last revision

to these codes was made in 2006 (FRC, 2006).

Predictably, in the light of the scandals

which had occurred – in the UK (Polly Peck,

Maxwell, BCCI, Marconi and Shell) – in the

USA (Enron, Worldcom, Tyko and Wall Street)

– and in Europe (Mannesmann, Parmalat,

Vivendi Universal), the reports and codes

emphasised the need for a stronger indepen-

dent representation on company boards. It was

argued that this could prevent executives from

committing fraud, restrain them from award-

ing themselves excessive salaries & bonuses,

replace the top management if they proved

incompetent and communicate directly with

institutional shareholders via a Senior Inde-

pendent Director (SID). Therefore, on the basis

of these reports and codes, the role of the NED

has been considerably enhanced and enlarged.

This paper summarises the results of a pre-

liminary analysis of the key competencies

(Qualities & Contributions) of outstanding

NEDs shortlisted for the Sunday Times NED of

the Year Awards for 2006, focusing on the

results from outstanding Non-Executive

Chairmen, who made up 18 of the 24 short-

listed, 16 of whom gavepermission to publish.

The role of the Chairman

Non-executive directors form the recruiting

pool for the next generation of chairmen.

Gay (2001) reported on a discussion with Sir

Adrian Cadbury who predicted an enhanced

role for the chairman in the board of the future.

*Address for correspondence:

Henley Management College,

Greenlands, Henley-on-

Thames, Oxfordshire, RG9

3AU.E-mail:vic@dulewicz.com

1056 CORPORATE GOVERNANCE

Volume 15 Number 6 November 2007

© 2007 TheAuthors

Journal compilation © 2007 BlackwellPublishing Ltd, 9600 Garsington Road,

Oxford, OX4 2DQ, UK and 350 Main St,Malden, MA, 02148, USA