A Great CEO Does Not Necessarily Make a Great Chairman
Dr. Hussein H. Rifai is a global business leader, investor, and company chairman with more than four decades of experience across 85 countries. He writes on leadership, corporate governance, private equity, artificial intelligence, and international business.
There is an assumption in business that I have never completely understood. Someone becomes a successful CEO. They build a large organisation, deliver strong profits, complete acquisitions and develop a reputation as a strong leader. Eventually, they leave executive life, and the natural progression seems to be a portfolio of directorships followed by a chairmanship.
It looks perfectly logical on a curriculum vitae (CV). But I don't think it is logical at all. Being a successful CEO does not necessarily make someone a good director. Being a successful director does not necessarily make someone a good chairman. They are three different jobs requiring three different mindsets.
I have spent a large part of my career in operations, management, investment and around board tables. I have been an executive, director and chairman. The longer I have done it, the more convinced I have become that we underestimate these differences. A great operator knows how to make things happen. A great director knows how to question whether they should happen. A great chairman knows how to create a board capable of making that judgement collectively. That last skill is much rarer than people think.
The skills that make a great CEO
Successful CEOs are usually decisive. They have to be. They are expected to solve problems, allocate resources, manage people, negotiate, compete and deliver results. When something goes wrong, everyone looks at the CEO. What are you going to do about it? So CEOs develop a natural instinct to take control. I understand that instinct very well. My own background was heavily operational.
Operations teaches you that problems have to be solved. If a factory isn't performing, you fix it. If costs are too high, you reduce them. If a customer is unhappy, you find out why. If the organisation is not performing, you change the organisation. That is exactly the mentality you want from a good executive. But it can be precisely the wrong mentality for a chairman.
The chairman is not the CEO of the board
This is probably the most common misunderstanding of the role. The chairman is not the CEO of the board. Directors do not work for the chairman. The chairman does not manage them. The chairman should certainly not start managing the company through them. The chairman is first among equals.
The authority of the position comes less from the power to make decisions and more from the ability to create an environment in which good decisions are made. That requires a very different personality. As CEO, you may have been rewarded for being decisive. As chairman, sometimes you need to wait. As CEO, you were expected to provide answers. As chairman, you need to ask questions. As CEO, people ultimately followed your decision. As chairman, you need people to reach a collective decision. As CEO, disagreement can sometimes slow execution. As chairman, disagreement can improve judgement. That transition is much harder than it looks.
Learning not to have the answer
One of the hardest things for successful executives to learn is that they don't always need to have the answer. They have spent decades being rewarded for having one. People came into their office with problems. They solved them. Eventually, it becomes part of their identity.
Then they become chairman. Suddenly, their job is not to solve management's problems. Their job is to make sure management and the board are asking the right questions about those problems. That requires restraint.
If management presents a major acquisition, the chairman should not immediately start explaining how he would negotiate the deal. The chairman should be making sure the board asks, "Why this acquisition? Why now? What alternatives have been considered? What assumptions support the valuation? What happens if those assumptions are wrong? How much capital are we risking? What are we not being told? What don't we know?" Perhaps most importantly, "Has everybody around this table had the opportunity to express their view?" That last question is where chairmanship begins.
The chairman's most important skill is listening
People often associate leadership with speaking. I increasingly associate good chairmanship with listening. A chairman should probably spend more time listening than talking. Not passive listening. Active listening. Who has not spoken? Who looks uncomfortable with the decision? Did somebody raise an objection that was dismissed too quickly? Is management answering the question that was asked or a different question? Are two directors disagreeing because they see the facts differently, or because they are working from different facts? Is the CEO becoming defensive? Is the board becoming too comfortable? Those things don't appear in the board papers. They happen in the room. A good chairman notices them.
You have to draw out the quietest person
Every board has different personalities. There will usually be one or two directors who speak frequently. There will be others who wait. The danger is allowing the most confident voice to become the board's voice. The chairman has to manage that. Sometimes the person who has spoken the least has the most important contribution to make.
I have learned that if someone has been unusually quiet during an important discussion, it is often worth asking, "What do you think?" Not because everybody needs equal airtime. But because boards are deliberately constructed with people who have different experiences. There is little point bringing those different experiences into the room if only two people dominate the conversation. The chairman's job is to access the collective intelligence of the board.
A chairman must be comfortable with disagreement
This is another major difference between operating and chairing. Executives generally seek alignment because eventually somebody has to execute the decision. Boards need something slightly different. They need constructive tension. I become nervous about boards where everybody agrees with everything.
If management presents a major acquisition, restructuring, capital raising, or investment and every director immediately agrees, either management has produced an extraordinary proposal or the board is not doing enough work. Good disagreement is healthy. Personal conflict isn't. The chairman needs to understand the difference. Two directors strongly disagreeing about strategy can produce an excellent discussion. Two directors attacking each other personally can destroy one. The chairman's skill is allowing the first while stopping the second. You don't suppress disagreement. You make it productive.
A chairman must be able to change his mind
This sounds obvious, but I think it is one of the most important qualities of a good chairman. If you walk into a board meeting having already decided the answer, you probably shouldn't be chairing the discussion. You can have a view. Of course you can. Experience exists for a reason. But you must be prepared to hear something that changes it.
That can be particularly difficult for successful former CEOs. Confidence was one of the qualities that helped make them successful. But confidence can become certainty. Certainty is dangerous in a boardroom.
I have changed my mind many times after hearing a director, executive or adviser make a point I had not properly considered. That isn't weakness. That is exactly why there is a board. If one person always has the answer, you don't need eight directors.
The relationship with the CEO is critical
Perhaps the most important relationship in corporate governance is between the chairman and CEO. It needs trust. But it also needs distance.
A chairman should want the CEO to succeed. The CEO should know that the chairman will provide support when things become difficult. But support cannot become unquestioning loyalty.
There will be occasions when the chairman needs to tell the CEO, I don't agree. The board needs more information. We aren't ready to make this decision. You need to reconsider this. Or occasionally, no.
If the chairman cannot have those conversations, the relationship is not working.
Equally, the chairman cannot undermine the CEO by becoming an alternative management structure. Executives should not be wondering whether they report to the CEO or the chairman. The CEO runs the company. The chairman leads the board. That boundary has to remain clear.
Information is power in the boardroom
One of the less obvious responsibilities of a chairman is ensuring that the board has access to the information it needs. Management inevitably knows more about the company than directors. The CEO attends management meetings. The board receives papers. Management knows the arguments that occurred before a recommendation was made. The board sees the recommendation. Management knows which assumptions are optimistic. The board sees the forecast.
That information imbalance can never be eliminated completely. But it can be managed.
A good chairman asks whether directors are getting the whole picture. Are papers arriving early enough? Are alternatives being presented? Can directors speak to senior executives? Can the board obtain independent advice when necessary? Is bad news reaching the board as quickly as good news? And critically, "Is management giving the board information, or managing the information the board receives?"
There is a big difference.
The chairman must protect the right to challenge
A healthy board should be a safe place to ask an unpopular question. That responsibility rests heavily with the chairman.
Directors should never feel that challenging management will make them disloyal. They should never feel they need to agree with the chairman to remain influential. They should never be made to feel difficult simply because they ask for more information.
The chairman should protect dissent, provided it is genuine and constructive. Sometimes the director asking the irritating question is doing the board the greatest favour.
The chairman cannot become too close to management
Relationships matter in business. But independence matters too. If the chairman becomes too close to the CEO, the board can slowly lose its independence without anybody noticing.
The chairman begins defending management rather than questioning it. Directors become reluctant to challenge the CEO because they know the chairman will intervene. Management recommendations become chairman recommendations.
Eventually, the board stops governing and starts endorsing. That is dangerous.
The opposite is equally dangerous. A chairman who constantly interferes with management will undermine the CEO.
The skill is maintaining enough closeness to understand and support management while preserving enough distance to judge it objectively. That balance is at the heart of good chairmanship.
The chairman has to think about the board itself
CEOs spend their time thinking about the organisation. Chairmen also need to think about the board.
Do we have the right directors? What skills are missing? Have people been on the board too long? Do we have genuine independence? Does somebody understand the industry? Does somebody understand capital markets? Do we have enough financial expertise? Technology? Risk? Customers? International markets? And increasingly, "Do we have directors capable of challenging the assumptions on which our strategy was built?"
A collection of impressive CVs does not automatically make a good board. The chairman has to build a team.
A great chairman does not need to be the smartest person in the room
This may be the biggest difference between executive leadership and chairmanship. The chairman's performance is not measured by individual achievement. It is measured through the effectiveness of the board.
That was one of the central principles in the original guidelines for this article. A chairman who dominates every discussion may look powerful. I don't think that makes them effective. A chairman who always has the final answer may look decisive. I would ask why the other directors are there.
The best chairman creates a board that is smarter collectively than any individual sitting around the table. That requires confidence without ego. Experience without arrogance. Authority without domination. Perhaps most difficult of all, the ability to allow somebody else to have the better idea.
Three very different jobs
I think we need to stop treating chairmanship as the final promotion for a successful CEO. It isn't. There is no automatic progression from operator to CEO, CEO to director and director to chairman. They are different disciplines.
An operator asks, "How do we make this happen?" A director asks, "Should we make this happen?" The chairman asks, "Have we created the conditions for the board to make the right decision?"
The first requires execution. The second requires judgement. The third requires leadership of people who do not report to you. That is a very particular skill.
Some outstanding CEOs develop it. Others never do.
The mistake is assuming that because somebody successfully ran a large company, they automatically know how to chair a board. They don't.
Chairmanship requires learning when to speak and when to remain silent. When to support and when to challenge. When to push for a decision and when to give the board more time. When to allow disagreement and when to bring people together.
Most importantly, it requires understanding that your success is no longer measured by what you personally achieve. It is measured by the quality of the decisions the board makes under your leadership.
That is why a great CEO does not necessarily make a great chairman. The skills that get you to the top of an organisation are not necessarily the skills required when you finally sit at the head of the boardroom table.
Read more from Dr. Hussein H. Rifai
Dr. Hussein H. Rifai, Thought Leader and Chairman
Dr. Hussein H. Rifai is a global business leader, investor, company chairman, and thought leader with more than four decades of experience across 85 countries. His career spans multinational corporations, entrepreneurship, investment banking, private equity, and corporate governance, advising boards and business leaders on strategy, mergers and acquisitions, capital raising, business transformation, and international growth. Holding a PhD in Business Administration, Hussein writes on leadership, corporate governance, artificial intelligence, international business and global competitiveness, combining academic insight with practical experience gained at the highest levels of global business.
