What you want in a nonexecutive chair: a full understanding and development of this role is still in its infancy.

• Author: Wolfe, Henry D.
• Position: BOARD LEADERSHIP

THE FOLLOWING QUALIFICATIONS for the position of nonexecutive chairman are presented in the context of broad generalities. There certainly will be exceptions for many of them, but I suggest that the exceptions would be rare.

The lens through which the nonexecutive chairman position typically is viewed as it relates to the functions of the role and most specifically to the qualifications is limiting at best. The bulk of the literature on and conversation about this subject seems to arise from an academic perspective or at best from a "governance movement" mindset. Much of this jargon also fails to acknowledge the still sorry shape and performance of many, if not most, corporate boards.

The nonexecutive chairman is not in place to serve academic theory, the governance movement, nor the overly formal and rigid world of the corporate insider. Instead, the nonexecutive chairman position should be viewed as the lynchpin in improving the agency relationship between capital (shareholders) and enterprise (the management and company). Therefore, what I would propose is that the proper lens through which to evaluate the role of the nonexecutive chairman is the lens of the investor. To that end, I offer the following qualifications--ones that are not absolutely essential and ones that are vital--in a nonexecutive chairman candidate.

Not Absolutely Essential:

* Currently serving on the board as a director. While this may give a candidate deeper insight in what needs to be improved in the overall functioning of the board, it also may eliminate the candidate if the board has not performed at a high level during the candidate's tenure. More importantly, incumbent board membership does not ensure that the other critical qualifications have been met.

* Having served as a former CEO. Depending on the individual, this can even be a negative from two perspectives: (1) May still have the desire for executive leadership and therefore will overstep bounds as nonexecutive chairman, and/or (2) May be too entrenched in the corporate management mindset to effectively challenge management when necessary.

* Having served in a senior operating role. This may not be a negative but is certainly not essential. (On average, give me a good corporate senior executive or a good private equity partner with no hands-on operating management experience and I will pick the private equity guy every time.)

* Industry knowledge and experience. That said, the incoming nonexecutive...