What is the role of the former CEO who becomes a non-executive Chairman?
A recent study by Russell Reynolds reports that 63% of board chairs have previously held a similar position, 15% are former CFOs or CFOs and 49% are former CEOs. In times of crisis, how does the role of Chairman of the Board of Directors evolve?
The Les Echos article, "What is the role of the former CEO who becomes a non-executive Chairman?" featured data from a Russell Reynolds Associates study on chairs of boards of directors, in which the majority of them are found to have held similar positions such as CEO and CFO prior to their current role. The article is excerpted below.
Emmanuel Faber, CEO of Danone, will become Chairman of the Group’s Board of Directors. Observers and the business community are in the habit of focusing their attention on the General Manager or the CEO, rather than the Chairman of the Board of Directors. However, since the beginning of the Covid-19 crisis, the role of the latter has evolved. “This period is a true ‘resilience test’ for corporate governance: the crisis has accelerated the need for transformation, thus leading the Board of Directors to make decisions with regard to strategic topics and choices that will lead to a long-term commitment of the company”, explained Sophie Bellon, Chair of the Board of Directors of Sodexo.
49% former CEOs
A recent study from the international headhunting (new talent recruitment) firm Russell Reynolds Associates reports that 63% of the Chairs of Boards of Directors have already held a similar position, that 15% are former CFOs – this being, for instance, the case of Denis Duverne, from AXA, and of Ross McInnes, from Safran – and 49% are former CEOs. Some, such as Jean-Pierre Clamadieu, from Engie, came from another group (he used to be CEO of Solvay), but in France, most of them become Chair of the Board of the group they previously led. Such is the case of Martin Bouygues and Pierre-André de Chalendar, from Saint-Gobain.
This state of affairs is criticized by David Samra, manager of Artisan Partners and advocate of the separation of powers of the COE. According to him, a former General Manager or CEO does not become, from one day to the next, a “good” Chairman of the Board of Directors. “The transition from the role of General Manager to that of Chairman of the Board of Directors is, without a doubt, a most delicate matter”, one director admits. Giving up the executive power is heartbreaking and the ego, put under considerable strain, feels the need for “support”… From this point of view, it is interesting to find that a firm like Russell Reynolds has been recruiting, in the past few years, an increasing number of psychology PhDs whose main task is to coach corporate executives.
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