Chartered Management Institute: In my opinion

Chartered Management Institute Companion Helena Shovelton says chairs and CEOs must work as a team in charities just as much as in business.

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Last Updated: 31 Aug 2010

Having chaired two very different bodies before becoming the chief executive of a charity, I reflect often on the differences between the two roles. The traditional route is to take the executive role first and then graduate to the non-executive one, but for me it has been the reverse.

This has made me more aware of the need to have good people in each role and of the part that each must play. I frequently find myself thinking as a trustee and like to adopt this perspective when we are considering issues in the senior management team.

The commercial sector has spent years discussing governance and decided that the roles of chairman and chief executive should be kept separate. The reasons for this are well rehearsed and valid. There are, of course, notable exceptions where the two are combined, but the prevailing thinking is that the need for clarity outweighs the advantages of having a single top decision-maker.

In practice, however, chief executives regularly become chairmen without any noticeable change in behaviour, sometimes within the same company.

They then bring in a new chief executive to work for them. In my opinion, having to compete with the past record of the chair can add to the difficulties of the job.

In the voluntary sector, the move from chief executive to chairman happens much more rarely. This is probably due in no small part to the fact that whereas chief executives in the voluntary sector are paid, chairs are not - in contrast to the commercial sector, where both roles are paid and the CEO's role is seen as a reasonable route for becoming chairman.

The voluntary sector is always looking for new talent and would see the move of a chief executive to chairman as inhibiting for the charity. Appointing a new chairman is an opportunity to bring in completely different talents to help the charity gain advantage in either government or commercial circles.

For a partnership to work well at the top of any organisation, there need to be complementary skills. If the incumbents are both too vocal, for example, competition between them will result in conflict at some point; yet if both are too quiet, they will not be seen as an effective team. It's always interesting to see whether this potentially difficult relationship works best if the chairman has appointed the chief executive or takes over with an incumbent in the senior management role. I've been in both positions and found that one worked far better than the other - but I shall leave you to guess which was the more successful.

The two leaders must work to an agreed strategy, with the roles clearly defined and each supporting the other. Many courses are run in the voluntary sector to empower the chairs of charities, which for some reason often assume that those appointed lack the necessary skills. But I've found that many chairs of charities bring considerable experience, and therefore valuable new skills, from elsewhere.

What they may lack is detailed knowledge of the differences required in the governance of a charity compared with a FTSE-100 company. Strangely, the level of personal legal responsibility is much more onerous in the charity sector than in a public company. The responsibilities of safeguarding money given by the public are seen in a different way from those associated with making money from commercial endeavours.

Every pound raised by a charity must be shown to be effectively spent, and although money raised in a commercial company must follow the same rules, effectiveness there is judged primarily by the amount of profit.

Whereas charities are obliged to show that surplus income is used for charitable purposes, companies can distribute their profits and be judged by how well they reinvest the money to achieve greater levels of profitability in future.

For me, both sectors demand equal responsibility. Leaders in any organisation face choices about how best to utilise resources and operate in the most effective way. Charities must maximise the impact of the donated money by harnessing the efficient business methods of the commercial sector to their charitable aims.

Of course, there are many varieties of organisation within the voluntary sector, just as there are in the commercial sector. It would be a mistake to compare the financial pressures of a small neighbourhood charity whose annual income is less than £10,000 with those of a major national charity with an income of £100 million-plus. The roles of chairman and chief executive will differ radically in each organisation, but much is demanded of each.

For my part, I'm finding the role of chief executive considerably less frustrating than that of chair, but the old instincts stay strong and I often find my fingers itch to get back into that position. For those lucky people for whom life is straightforward, graduation from one role or size of organisation to another will be seamless. My advice would be to embrace all the opportunities, because each will teach you a lot.

CV

Dame Helena Shovelton is the chief executive of the British Lung Foundation. She is the former chair of the Audit Commission and the National Association of Citizens Advice Bureaux. She has been a member of the Competition Commission and the Better Regulation Task Force, in addition to a variety of other quangos, and is a director of the Energy Saving Trust.

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