By Chuck Gray, Megan Trice and Greig Schneider
At a recent dinner with a group of seasoned board members, we posed a question: How do your boards select the independent leader of the board? After a rather long silence, what surfaced confirmed a common pattern: When the time comes to choose a new non-executive chair or lead independent director (LID) everyone seems to “just know” who it will be. There is rarely an established or transparent process to reach that conclusion or to confirm it is the best choice.
As a result, the individual responsible for shaping governance culture, managing the CEO relationship, and guiding directors through complex strategic and fiduciary decisions is frequently chosen without a defined set of expectations or a structured evaluation. “When electing a lead director, each board is different,” as one experienced lead director put it. “In some cases, there is a board within the board. There is an inner circle or clique which makes the decision. The other extreme is when the lead director is selected by the CEO.”
This inconsistency is concerning, given the role of the chair has become even more demanding—and critical—as boards face rising expectations around oversight, strategy, risk, and stakeholder management amid escalating complexity. A chair’s responsibilities extend far beyond running meetings; they must orchestrate board dynamics, ensure constructive challenge, maintain alignment between the board and management and serve as a stabilizing force during moments of crisis or transformation.
Without taking time for discussion and debate to define a clear role specification, boards risk selecting a leader based on inertia rather than alignment with future governance needs.
Initiating the Process
How does the need for a new board leader typically emerge? This itself can be a challenge. Unlike most UK and EU companies, which can plan transitions due to term limits (typically nine to 12 years depending on the market), only 11% of S&P 500 companies have term limits for any directors, according to The Conference Board’s benchmarking data. In addition, the data show that only 61% have an age limit, (most commonly 75 years), meaning that a sizeable number have no structural reason to transition the chair.
This being the case, for U.S. companies the impetus for a new board leader will often need come from somewhere else. Beyond voluntary retirement, often a CEO transition will prompt changes, and sometimes a board effectiveness review can spur action. Such reviews are important given the difficulty boards tend to have giving themselves feedback; however, in our experience, serious introspection is still not common.
However, a proper review, one that goes beyond checking a regulatory box and analyzes both collective and individual performance, can be a very effective tool in two ways. First, it can confirm that the chair is doing the job well or if a change is needed. Second, it can review the process by which a change would be made. In the U.S., too often both the tenure and the succession process are more a matter of inertia than intent, and given the importance of the role, that is not good enough.
Defining the Specification for a Highly Effective Board Leader
Regardless of how the occasion arises, selecting a new board leader requires open and honest dialogue about what the board and the company needs in the new leader. As with any high-level leadership transition, it’s helpful to define the role specification across three dimensions: desired experiences, key competencies, and personal characteristics.
Desired Experiences: What boxes should be checked?
Desired experience typically includes governance expertise, prior leadership of a board committee, experience with CEO succession, and credibility with the shareholder community. Depending on the company’s performance and future trajectory, the board may seek a leader with specific experience in setting strategy or specific business situations (e.g., merger integration).
Key Competencies: What does the chair need to be good at?
Regardless of context, ownership structure, and industry, the board leader must have strong people leadership skills. While the ability to drive results and set strategies is helpful, the focus is governance, not management. This role demands the ability to get the most out of highly accomplished colleagues, pushing their thinking and challenging where needed, while at the same time maintaining a productive and collegial atmosphere.
Good chairs know when to listen and when to lean in. They draw out all voices and reinforce behaviors that align with the board’s culture and purpose. They balance an array of different stakeholders, both internal and external. And they bring a coaching mindset to their work and develop strong future board leaders—including their own successor.
Personal Characteristics: How does the leader show up?
The ideal board leader has high EQ and low ego. They set aside personal agendas, focusing on advancing the company’s purpose and delivering on objectives for key stakeholders. They demonstrate independence, integrity, courage in challenging biases and the status quo, openness to new ideas, and smart risk‑taking. They conduct themselves in a way that engenders respect.
The process should also consider how the chair fits into the broader leadership constellation, including the CEO’s strengths and gaps and the broader composition of the board. All of the above will vary depending on the company’s specific circumstances.
Getting the Selection Right
The process should begin years before the need becomes imminent. There are several steps which can help.
• Have a plan! As with senior leadership, the board should not be guessing about when chair succession will occur. Chairmanship of all committees should be regularly reviewed, with succession plans and processes in place.
• Start early: The more time the board has to cultivate the desired experiences and skills among its board members, the better. Ideally there would be several good options, but if no clear successor exists internally, this can inform future board recruitment, enabling the board to bring in directors with succession potential.
• Be clear about who owns the process: This can be surprisingly tricky since many committee chairs (particularly NomGov), may be candidates themselves. In some cases, a wise and self-aware outgoing chair or LID can lead the process successfully, but in others it can be difficult to maintain impartiality. We find it best to appoint an unconflicted committee leader who is not seeking the role to manage and oversee the process.
• Decide how to decide: When it comes time to make the selection, the board should agree on the mechanism—whether democratic or more centralized—and be aligned on how decisions will be made and by whom. It should also be clear on how references will be taken on possible candidates to ensure there is support. While not every detail must be transparent, the process itself should be.
• Develop a clear role specification: As described earlier, gather perspectives from the full board and the CEO to be clear about what is needed. Depending on context, you may also need the views of other key stakeholders (e.g. in family-owned businesses).
• Evaluate the candidates: Once alignment around the specification is reached, the process owner should lead a formal evaluation of candidates. This helps the board reduce bias and fight through “inertia” to get the best qualified candidate.
Unlocking the Board’s Potential
In an era when board leadership carries unprecedented complexity and visibility, relying on an implicit approach or the “obvious choice” is no longer sufficient. Boards that invest the time to define the role, articulate the competencies that matter most, and establish a thoughtful, transparent selection process are far better positioned to choose leaders who can guide the board and the company through uncertainty and transformation.
By shifting from tradition-driven decisions to deliberate, strategic appointments, boards strengthen governance, elevate their effectiveness, and ensure that their next chair or lead independent director is equipped to handle not only today’s demands but the complexity and challenges that lie ahead.
Chuck Gray, based in New York, is a partner and co-head of Egon Zehnder’s North American Board & CEO Practice.
Megan Trice leads Egon Zehnder’s Minneapolis office and is a leadership advisor in Egon Zehnder’s Consumer Practice.
Greig Schneider, based in Boston, is a partner and former leader of Egon Zehnder’s Global Leadership Advisory Practice.