In this article Guy Farrow, Regional Managing Partner of the Board & CEO Practice for Heidrick & Struggles across APAC and the Middle East takes a closer look at the Chairs of ASX 50 public companies and examines how boards can ensure Chair succession planning is designed to increase diversity and meet future requirements.
Over the past few years, Australian businesses have had to manage both the impacts of relentless global crises including COVID-19 and the war in Ukraine as well as challenges closer to home including changes in political governance and a rising cost of living.
The effects of these disruptions on business have been swift: for example, due to the pandemic, remote work has gained significant ground and companies’ ability to attract talent is tied more than ever to how they approach sustainability, flexibility, inclusion, and employee wellbeing.
As in many countries around the world, a new license to operate is taking hold for Australian businesses, in part due to the increased societal expectation that business leaders should step in and help solve problems that governments cannot tackle alone.
Boards and Chairs must be ready to guide their companies in meeting these new expectations through what is likely to be a volatile future. In many conversations with chairs around the world, these leaders have emphasised that they want to be connected to external events as much as internal processes, keep up with macro trends, be able to listen to what their stakeholders are telling them, and thoroughly understand and be able to evaluate new threats and opportunities.
In that context, this report examines the backgrounds of the chairs of ASX 50 companies. We found a rather traditional profile: most are men with CEO backgrounds and previous chair experience. (This is similar to Fortune 50 companies, at which 92% of chairs are men and 80% have CEO experience.)
Chairs with this type of experience bring deep expertise to the table. But, as new considerations take hold, we believe that boards will benefit from broadening their horizons as part of rethinking their succession planning approach; this will help boards prepare for multiple scenarios and time horizons.
For the full data, download the PDF.
How to enhance ASX 50 chair succession planning to meet the future
Frequently review and update the desired profile of the next chair. Boards should determine the proper mix of more traditional executive experience and newer areas of experience needed for the next phase of their company and be clear about must-haves and options necessary for different future scenarios. In addition, we believe that as boards are expected to meet a more complex set of expectations, they will need to pay equal attention to both hard experience and the softer side of potential chairs’ leadership capabilities, such as curiosity or agility, to ensure boards are inclusive and effective. In our experience, too many boards still, in the end, make their choice of chair based on yesterday’s criteria.
Broaden the criteria. Keeping in mind the skills and experiences of which their company is most in need, boards should otherwise open their criteria to a wider pool of candidate backgrounds and experiences. Women less often have previous chair, board, or CEO experience, for example, but many companies will likely already have a number of directors on their boards with these backgrounds; therefore, it may be that bringing in a chair without that experience will still lead to the board members having complementary skill sets.
Expand the search to less traditional sources. Many companies are still hiring chairs through networking and familiarity, but those willing to consider candidates including, for example, chairs from other industries, will enrich their options considerably.
Ensure an inclusive board culture. The role of the Chair will be more appealing to a wider range of candidates if the candidates feel they will be able to sustain a safe space in which everyone can contribute and engage in robust debate and problem-solving. Board Chairs can begin to ensure an inclusive board culture by understanding its current culture and setting up regular board effectiveness reviews to assess and help maintain a thriving board culture.
However, as the business license to operate keeps changing along with new demands and considerations for boards, we believe that in order to be fit for the future, boards will derive value from rethinking their succession planning approach to reflect multiple scenarios and time horizons. When it comes to Chairs, that means a larger, more diverse pool of candidates who can step in when their leadership skills make them the right fit for the role.
About Guy Farrow
Guy Farrow is a partner in Heidrick & Struggles’ Sydney and Melbourne offices and the regional managing partner of the CEO & Board of Directors Practice for Asia Pacific and the Middle East. Previously, he was a co-chair of the Global Promotions Committee overseeing internal promotions to partner. Other previous leadership roles include managing partner of Australia and regional managing partner of the Industrial Practice in Asia Pacific.
Guy specalises in board appointments, CEO succession, senior executive search assignments, and the assessment and development of top executives. He has conducted numerous chairman, non-executive director, and CEO succession assignments, helping several ASX-listed, unlisted, and private equity companies across a range of industry sectors.
More insights from Guy at Meet the Headhunters | 18 October
Guy is guest speaker, along with colleague Annalie Davis, at WOB's Meet the Headhunters online session on 18 October. Click here to REGISTER