Research Contribution and Conclusion

Abstract

Chapter 8 discusses the overall results, implications for academia and practice, research outlook, and concluding remarks.

Chapter 8 is the last of this study and concludes the findings of the input-process-output research by summarising and discussing the overall results, highlighting their contribution to academia and practice, and providing an outlook for future research. The primary focus is on the discussion of the findings in order to justify the results achieved.

8.1 Overall Summary and Discussion

The following chapter summarises and discusses the qualitative and quantitative findings by applying the sequential mixed-methods design (qual → QUAN).¹ Within the qualitative paradigm, a theory elaboration approach enabled an extension of the intermediate research level of the topic under study (Section 5.3.2). By applying open coding, axial coding, and selective coding, the exploratory interview approach permitted the identification of the multidimensionality of topics/contexts in which chairperson succession planning is embedded. Within the qualitative paradigm, a web-based survey among SPI chairpersons and nomination committee chairs examined the previously elaborated theoretical and qualitative principles.

In the following, first, the survey results under study are recapitulated according to the three research dimensions of chairperson competences (RQ1), process moderators (RQ2), and voluntary disclosure (RQ3), and second, the results are discussed. In principle, the overall results corroborate that chairperson competences are broad, process moderators are manifold, and voluntary disclosure of succession is approached passively.

8.1.1 RQ1 Summary and Discussion

Table 8.1 at the end of this chapter provides a summary of the underlying quantitative findings in relation to the competences of chairs of RQ1 (input-process-output). As a recap of the empirical part, the following results were obtained (review highlighted in grey):

RQ1-1: Person- and Work-related Competences

First, organisations generally prioritise person- over work-related competences, which is particularly emphasised by the fact that technical competences are ranked as the least important dimension. With respect to the hierarchical constellation of competences (Section 4.2.2), there are exceptions, as business competences are prioritised over social competences and as family-/state-owned organisations clearly place leadership above all other dimensions compared to organisations owned by institutional block holders.

Within the quantitative paradigm, it was recognised that personal, leadership, and business competences are the three fundamental pillars that determine a chairperson’s competence profile. For the three pillars illustrated by the quote “the chairperson is morally the last line of defense” (PI 27), the interview and survey participants confirmed that the chairperson needs to fulfil a variety of competences that go beyond the requirements of an ordinary board member. “For a board to ensure the organisation’s continuing prosperity, the chairman needs a broad range of skills, competencies and particularly capabilities” as also emphasised by Jackson et al. (2003, p. 197). The broad range relates to multidimensional roles and scope of responsibility (e.g. visionary thinking skills appear to be more required in mid-sized organisations). The multidimensionality has to do with sociological and psychological perceptions that go beyond the principal-agency paradigm to which organisations adapt (Maitlis, 2004, p. 1280). As emphasised by the theoretical concept of the Organisational Role Analysis, the function of the chair is determined by internal/external normative expectations and thus highly contextual.

Due to the multiple responsibilities of the chair (Section 4.2.1), the quantitative results infer that it was probably challenging for survey participants to prioritise one competence dimension over the others.² From the majority of ‘strongly agree’ and ‘agree’ responses (Figure 30, Section 7.4.1), excluding potential methodological pitfalls (e.g. ceiling effect, Section 7.7), it therefore seems likely that organisations over-profile in this immensely important position. As the goal of any organisation is to find the most suitable person for the chair position, the demands on the person are high and so are the competences required. Analogous to the utility maximisation ideal (Section 3.1), however, the candidate pool is limited (supply/demand) and trade-offs/compromises are necessary (Baumann, 2021; Withers et al., 2012, p. 244). One such trade-off is competence downsizing. It usually takes place after the personal interview rounds and is determined by complementarity criteria derived from the standpoint of rational economic vs. social embeddedness (Section 4.1.2).

The comparison of the empirical findings for the top-three dimensions, albeit with limitations due to the intermediate research stage, shows that the thesis met its objective and expectation. The Dulewicz et al. (2007) study “What Makes an Outstanding Chairman?” also highlighted that listed organisations consider investor confidence (leadership competence), integrity and ethical behaviour (personal competence), and strategic review and attitude towards change (business competence) as the most important factors for a chairperson. Putting that into perspective, following Parker (1990), this gives the impression all the more that “every successful chairman is by definition a leader” (p. 42). A successful chairperson is not so much a functional expert (technical competence), but rather someone who simultaneously values and strengthens human interactions (personal and social competence) to guide and develop the board and the organisation (leadership and business competence).

Social competence is the fourth most important dimension for the position of chairperson. Since the chairperson acts as an interface between the organisation and the environment, the rather undervalued social competences and the ability to build and maintain relationships through verbal eloquence or cognitive empathy is at odds with theory (Hogan & Warrenfeltz, 2003, p. 79). Prior to the empirical analysis, it was expected that attributes such as ‘cultural fit’, ‘emotional capacity’, ‘social interaction’, and ‘facilitator’ would relate more to the board chair (Section 6.4). However, the findings of the survey have shown that for the chairperson, the quality criteria of economic performance, focusing on the control, monitoring, and strategy functions rather than the service, coordination, and linking functions, are still the main focus of interest (Section 4.2.1). From that perspective, board chairs are either not fully aware of their multiple roles or (too) little attention is paid to human/social competences. While one can only speculate about the former, the reason for the latter is a consequence of the low use of assessment centres at board level to systematically approach a person’s profile (Section 6.3). The question of whether assessment centres or awareness-raising measures strengthen the social skills of chairpersons cannot be answered conclusively either, as there are no concrete research results in that direction. In this context, the circumstances are particularly exemplary of the intermediate stage of research (Section 5.3.2).

Notwithstanding the fact that technical competences are the least prioritised competence dimension, it becomes clear that current (mega)trends also change a competence profile. Competences are by no means static, but dynamic and can therefore change over time (Werder & Wieczorek, 2007, p. 298). In view of the COVID19 pandemic and the societal debate, topics such as digitalisation (technology) and sustainability (ESG) are in the foreground (besides specific industry knowledge), also for the chairperson (Korn Ferry, 2020, p. 11). If one expands the perspective to the effect that curiosity about (mega)trends is part of the personal dimension, it becomes evident how much the various competence fields are interlinked. This also indirectly confirms the dyadic relationship in which competence categories are embedded (Section 4.2.2).

The comparison of the empirical results with the theoretically established competence framework shows that there is a hierarchical discrepancy. The gap between hierarchical theory (Section 4.2.2) and practice (Sections 6.4 and 7.4) refers to the fact that the position of the board chair cannot be compared to an ordinary board or top senior management position on which the theory is partly based.³ The very fact that there are inconsistencies and dissimilarities in the results confirms the general expectation that the chairperson needs a broader range of competences than ordinary board members. This view was confirmed by the total of 89% of survey participants who (strongly) agreed that chair succession is more comprehensive, or the 80% who (strongly) agreed that a chair needs broader competences than an ordinary board member (Section 7.3.1). Therefore, this also indirectly confirms the existing over-profiling effect.

RQ1-2: Integrity (Personal Competences)

Second, besides authenticity, curiosity, and engagement, the respondents emphasised integrity as the most essential element of the personal competence dimension. Consequently, a chairperson of good moral character and low ego is crucial for critical discussion to flourish within the board, senior management, and the organisation (Leube, 2012, p. 213).

The strongest results for integrity are the chairperson’s attitude towards duty of care and diligence, duty of good faith, and duty of loyalty (Section 2.1.2). It turns out that ‘personality’, ‘low ego’, and ‘character’ are key attributes for a prospective chairperson (Section 6.4). Particularly a well-developed ‘personality’ that is strongly based on values and ethics allows critical matters to be addressed with a sense of the situation and context. This is an aspect that is becoming increasingly important, especially in stakeholder relations (keyword stakeholder value creation; Yar Hamidi, 2019, p. 425).

One interview participant gave the example of a simple ‘thank you’ to the person who serves coffee during the board meeting, implying behaviour with integrity towards that person. “I just feel that it is important to have great respect for the people”, the person justified the example (PI 27). “In order to mitigate that challenge [of who leads the organisation, the chairperson or the CEO], I think, it is wise for the chairman to basically withdraw himself, particularly when it comes to internal communication where the CEO always is in a clear leadership role and not the chairman” (PI 18), another interviewee remarked in that context.

By addressing the hierarchical relationship between personal and social dimensions (Section 4.2.2), the illustrative examples thereby described precisely why integrity for a chair is key: for dealing with people, be it in private or business conversations as a representative of an organisation. However, living integrity also entails being mindful of the organisation’s purpose, mission, and culture (Johnson et al., 2018, p. 27). If the person “is driving around with the most expensive cars and sits on a company board with high sustainability as purpose, it will not work” (PI 6). This in turn also links the issue of role or group fit (Section 4.1.2) and thus represents not only a personal but also an organisational dimension.

RQ1-2: Stewardship (Leadership Competences)

Third, when searching for a leadership personality, survey participants favour chairpersons with stamina and stewardship skills, with a stronger tendency towards stamina. The second ranking for stewardship, among other reasons, is due to the fact that respondents with less than 10 years of board experience prioritise stewardship less (1% significance level).

The lower level of support for stewardship competences by those with less than 10 years of experience can be associated to generational disparities due to the changing perception of the board chair’s function (primus inter pares, Section 1.4.3). Whilst in the past, the board chair was considered ‘untouchable’, today he or she has to face personal assessments tests and a vote of no confidence (in German: Misstrauensvotum) from the nomination committee (Schürpf, 2022). Therefore, in this respect, there is no longer a strict separation between the chair as steward and the ordinary board members as followers. Following the values of team production theory, it is rather the case that ordinary board members must also engage actively to create added value in the board.

“It is the board as a whole, but he [or she] is the chairperson, that is why he [or she] is named as a chairperson” (PI 37). However, the “lazy chairman” (PI 11, Table 6.4, Section 6.4), implies that in practice, it is still the chair who is responsible for implementing board rules and who needs stewardship skills the most of all board members (Spencer Stuart, 2020a, p. 20). But why, contrary to theoretical expectations, do survey participants place more emphasis on stamina? The role and position of the chair is essentially to be the internal and external representative. There, first, “it is not about pleasing everyone” (PI 15), and second, “I think that the chairperson also needs to feel uncomfortable if everything is decided quickly” (PI 33). With the nomination approval comes the responsibility to act in the best interest of the organisation. This includes being critical and generous at the same time, all without losing faith in one’s own view (Gabrielsson et al., 2007, p. 27). Even though it seems logical at first glance and is reinforced by the example illustrated, stamina goes beyond the personal dimension. As “steward of boardroom affairs” (Cadbury, 1992, p. 21), the chair ensures that the strategy adopted is pursued accordingly despite (to some extent) resistance from anchor shareholders and proxy advisors (Berns & Williams, 2022, p. 43). In this potential area of conflict, therefore, the chair must be prepared to lead outside his or her “core domain of expertise” (Spencer Stuart, 2020a, p. 7). Looking at the Cadbury quote, it thus also becomes clear that stewardship and stamina are both closely intertwined and essential for the board chair.

RQ1-2: Board Literacy (Business Competences)

Lastly, in the business realm, the survey results stressed hat board literacy is key for the chairperson, yet with greater preference for strategic thinking. It is indisputable that chair personalities with vast transactional know-how offer advice that stakeholders value (Lee & Phan, 2000, p. 207), but participants rank the ability to adapt the organisation’s strategic raison d'être as more important.

When it comes to board literacy, expertise and knowledge of running an organisation are necessary to adequately challenge the board and the senior management (Higgs, 2003, p. 24). As “keeper of the board” and “minder of the CEO” (Kakabadse & Kakabadse, 2007, p. 171), the use of expertise (challenge) and wisdom (mentor) is necessary, but also very difficult to keep in a healthy balance. To successfully steer a board, it is thus a question of trustful and constructive feedback rather than just “applying command and control mechanisms or schemes” (PI 19).

The fact that board literacy was not strongly acknowledged by all participants is due to the controversial discussion about whether/which experience is necessary (thus one reason why it was integrated into the survey). By that, prior experience should be understood as a driver for board literacy. As (re-)emerging business and decision-making cycles require transactional experience, having prior situational context or know-how enables appropriate board engagement. Together with the full board, chairpersons with prior experience can then draw on their wealth of knowledge to adequately address the situation and context (Helfat & Martin, 2015, p. 1286).

In this respect, thus, experience was indispensable for some respondents, as otherwise “the balance would be too much in favour of the CEO” (PI 33). In contrast, others felt that experience has a rather negative impact on innovation in strategic board roles, as it ”limits your thinking and your ability to create a bold vision” (PI 7). Spencer Stuart (2020a) therefore argued that “the arrival of a new generation of chairs, usually former executives, with fresh ideas and fresh approaches should be celebrated” (p. 5). The interpretation of the survey and the interview results show that participants favour strategic thinking over board literacy, as the loss of conceptual flexibility, ability, and capacity for seizing organisational opportunities would have a greater negative impact on chair effectiveness (Langan et al., 2022, pp. 7, 32; Maitlis & Christianson, 2014, p. 58).

Table 8.1 Survey – RQ1 Summary of Results

8.1.2 RQ2 Summary and Discussion

For the process moderators of RQ2 (input-process-output), Table 8.2 highlights the results in relation to the research subtopics approached. Following Section 7.5, the analysis produced the following insights (survey results recap highlighted in grey):

RQ2-1: Business Contingencies

To begin with, business contingencies have a major impact on succession planning for the chairperson. Particularly the board structure (e.g. composition, culture, dynamics) and strategy (e.g. organisational challenges, transformation needs) can hinder/support the search for a chairperson. With regard to board structure and strategy, the succession process is more influenced by future than present business conditions.

Board structure is the driving variable within the business contingency dimension. Here, it became clear very early on that specifically the board atmosphere is crucial to how the process works. Basically, the first thing is to “continue to have proper board dynamics” (PI 15)—also towards the CEO. Since the process takes place in a group (either in the nomination committee or in the board as a group), the atmosphere in the board and the way information is shared, conflicts are discussed, and compromises are found, is crucial for the search process (Winter & van de Loo, 2012, p. 236). Second, the decision for/against a candidate lies in the question of whether to “have a candidate that is a cultural add versus a cultural fit” (PI 7). The goal is to find a person who strengthens the culture of the board with regard to both factors. Achieving this, however, requires a seamless transfer of power (Weisblat, 2018, p. 18). Finally, it also depends on how the process owner, preferably the chair of the nomination committee (Section 7.2.2), interprets, addresses, and prioritises the dynamics in processing and planning.⁴ It is therefore essential to address succession planning early and openly in order not to have “totally misunderstood the dynamic of the board and [not to have] totally misunderstood my colleagues” (PI 2). Accordingly, as all three statements emphasised, it is crucial to acknowledge the expectations of all members to nominate the most suitable person (Elms et al., 2015, p. 1315).

With respect to strategy, the process owner should exercise caution in fortifying strategic capacities (Banerjee et al., 2020, p. 384). Therefore, to prevent a “brain drain” (Wilson, 2018, p. 200), organisations use strategy as “a north star when defining the profile, that should then also guide the entire process” (PI 7). Despite the value of strategy in planning the process, however, it was at odds with certain practices. “I sometimes miss that the succession is really related to the strategy of the firm” (PI 6), remarked a board advisor. Particularly during the board assessment and profiling phase (Section 4.3.1.1), attention should be paid to linking succession to the company’s value creation in order to move the company forward (Wendee et al., 2018, p. 224). Presuming that strategy is used as a compass, organisations prioritise a candidate who either maintains continuity or advocates fundamental change, depending on the strategic context in which they find themselves (Fernandez-Araoz et al., 2021, p. 10). For one of the interviewed chairpersons, who is an expert in transformation/restructuring, it was therefore clear early in the search process that he/she has good chances to be appointed as the next chair, as the organisation needed to be turned around quite drastically – according to the maxims: “Start, run, change, and get it done” (PI 24).

Addressing the life cycle, it became clear during the qualitative and quantitative analysis that the process generally follows a problemistic search rather than a slack search (Section 4.3.3.1). This has to do with the fact that the organisations in the survey sample are among the largest and often oldest organisations in the Swiss economy and are therefore mostly long-term oriented (Section 7.3.1). Short-term, ill-considered decisions would lead to strong market reactions (Gangloff et al., 2016), which must be avoided. For them, the process therefore had to follow a certain structure. Otherwise, the “lack of clarity over the authorizing structure will cause conflict and tension” (Osnes & Wilhelmsen, 2021, p. 40). A systematic approach provides planning security and also makes it possible to keep a record of the relevant meetings/steps. The latter is especially necessary to prove decision-making to regulatory authorities and serves as a control mechanism to discipline and “safeguard the interest of the shareholders of the enterprise” (Kakabadse & Kakabadse, 2007, p. 170).

Lastly, the fact that unexpected, underestimated results on ownership structure occurred is mainly related to the specific strong block holding structure affecting the underlying survey sample (Section 7.2.2).⁵ Assuming that long-standing partnerships exist and there is no activism, there should be no unpleasant surprises following a planned succession. However, a prerequisite for this is that a value-oriented owner strategy is in place for the mostly individual/family, state, and institutional shareholders and that expectations are met (Baron, 2019, p. 5). In this context, it is vital to link succession to the equity story. For one interview participant, “investors always invest in people” (PI 27). Succession is therefore about presenting the candidate convincingly and linking his/her nomination to the purpose of the organisation. If interpersonal and interorganisational relationships can first be improved and then stabilised, confidence in the chair’s actions and the board’s management will be strengthened (Vergauwen et al., 2007, p. 1165).

To summarise, succession processes are planned differently depending on board structure, strategy, ownership, and life cycle, as certain business-related factors are more or less prominent. That is perhaps one of the reasons why there is no such thing as one process. Therefore, it is important to analyse and adequately consider them in the planning phase. This way, they can be duly taken into account upfront.

RQ2-2: Environmental Contingencies

Second, notwithstanding the fact that external influences and changes affect board composition (Section 4.3.3.2), environmental contingencies have a medium influence on the processing of succession. Even though there are differences between different block holding structures in terms of regulatory aspects (institutional investor- vs. state-owned) or proxy activism (family- vs. institutional investor-owned), participants felt that these influences did not have too much impact on the process. One exception was the financial services sector, where FINMA exerts a major influence on the search for the chairperson.

Among the environmental contingencies, industry affiliation has the strongest influence on the process for three main reasons. First, “depending on the market or segment, clearly, you find a different breed of chairpeople” and thus a different dynamic in the boards (PI 27). As participants with cross-sector mandates in particular noted, the process can differ in terms of how information is shared and how stakeholders are engaged (Walther, Morner, & Calabrò, 2017, p. 360). Second, industries such as real estate and health care are particularly characterised by long-term projects. In terms of succession, the planning cycle in those industries – assuming a normal course of business – “is not driven by short-term actions or short-term changes” (PI 28). The person nominated for the chair is thus expected to preside over the board in the long term. Third, and this also refers to the “regulatory mountain” for the next bullet point (Shekshnia, 2021, p. 54), financial service providers in particular will check in advance with FINMA whether the regulator (dis)agrees with the candidate being considered. To keep the circle of persons/institutions in the succession process as small as possible (keyword confidentiality), the organisations nevertheless strive to involve the supervisory authority at the earliest in the phase of the evaluation process due to the FINMA regulation (evaluation process is step 3 within the framework of the succession process, Section 4.3.1). Presuming the market regulator is involved, this delays and professionalises the process, as further clarifications may be necessary (disadvantage), but also forces organisations to plan and protocol systematically (advantage). The latter results in financial organisations focusing more on candidates who match the search profile, have a financial background, and a clean track record. Multiple screening makes bank chairs less likely to sit on other external boards on the one hand, but more likely to have strong banking experience on the other (Nestor & Tsilipira, 2019, p. 16; Rajgopal et al., 2019, p. 15).

Another effect of process adaptation refers to market dynamics with “crisis, market turbulences, or even market changes” as particular potential change drivers (PI 28). However, interview participants considered it to be particularly important to differentiate between short- and long-term changes. When unexpected changes occur, the board needs to adapt quickly. Such “short-term interferences […] might produce other needs, might need other capabilities” (PI 28), which can completely change a succession process. One example is the COVID19 pandemic, which probably led to a change in the process from physical attendance to virtual discussions without any advance planning (Nyberg et al., 2021, p. 191). In the long run, this effect seems to be losing relevance as it can be better planned (preparation) and thus appropriately managed (implementation). A pertinent example is the financial crisis, which in retrospect led to multiple disruptions in board processes with transparency, among other things, being greatly strengthened afterwards (Gul & Leung, 2004, p. 352). In the normal course of business, which is less related to specific events (e.g. COVID19, financial crisis), the market dynamics that mainly changed the succession or board composition are likely to be due to new market trends (Kakabadse & Kakabadse, 2007, p. 178) and market complexity (Markarian & Parbonetti, 2007, p. 1239). This led to the profile containing more specific expert knowledge.

Despite proxy activism being considered a ‘tick-the-box’ approach with ‘excessive influence’ (Section 6.5), the presence and influence of proxy advisors clearly increased in recent years. Recent studies have shown that proxy pressure leads to shifts in shareholder votes (Choi et al., 2010; Choi et al., 2011), to board settlement agreements (Bebchuk et al., 2020), greater boardroom diversity (Berns & Williams, 2022), and increased nominee credibility (Brav et al., 2021). Although boards have recognised that they need to address these issues proactively (Cappucci, 2019, p. 621), the generally high influence could not be confirmed in the sample. According to survey participants, the influence of proxy activism on succession is subsequently low, which was not expected given the studies mentioned above. However, there is one limiting effect. Taking into account the critical opinions from the interviews and assuming that this is likely to affect the outcome of the survey, the actual proxy effect could potentially be higher given the organisations’ compliance efforts and the influence of proxy advisors on AGM votes (Section 4.3.3.2).

In summary, environmental contingencies have the third strongest influence of all four dimensions. Environmental embeddedness influences succession planning through its incentives and sanctions. The dimensions of regulation, proxy activism, market dynamics, and industry thereby determine the strength of the public echo and/or the external number of actors involved in the process. Particularly with regard to the echo, it is important to meet market expectations in order to avoid unexpected surprises and disruptions in the succession process (Banerjee et al., 2020, p. 389).

RQ2-3: Governance Contingencies

Third, governance contingencies have the greatest influence on succession processing. With independence, confidentiality, and overboarding being the three most crucial factors, organisations should be mindful of integrating governance practices in their processing. These factors, although not specifically asked in the survey but used to derive the underlying theory/research question, include accountability, information exchange, and fairness (Eminet & Guedri, 2010, p. 560; Leube, 2012, pp. 210–211).

The governance findings support the institutional theory perspective and reinforce the efforts of the organisations to comply with applicable governance codes and best practice patterns (Chapter 2). The recent examples of Credit Suisse/Helvetia and UBS have shown how strongly governance factors influence board chair succession. At Credit Suisse, the newly appointed Axel Lehmann did not stand for election as chairperson of Helvetia, as this would otherwise have led to an overboarding conflict (Schürpf, 2022). In turn, his successor at Helvetia, Thomas Schmuckli, also relinquished his board mandate at the subsidiary Credit Suisse Funds in line with independence expectations. It is argued that overburdened and/or biased directors often fail to exercise control and monitoring functions adequately (Fich & Shivdasani, 2006, p. 692). The examples of Axel Lehmann and Thomas Schmuckli therefore perfectly illustrate why time and independence constraints were the main reasons why candidates turned down offers (Jong et al., 2014, p. 270).

At UBS, Lukas Gähwiler was appointed vice-chair to counter criticism of the lack of Swissness of chairperson Colm Kelleher (Irish) and CEO Ralph Hammers (Dutch) (Baumann, 2021). The appointment follows the reasoning of Ruigrok et al. (2007, pp. 555–556), who specifically pointed out that, first, local directors are more likely to interact with the senior management and, second, foreigners with a strong domestic network can bring creative ideas, but bear the risk of a minority trap in board voting. Swissness can therefore be expected to be associated with a positive bridging function (Frey, 2021, p. 89). Thus, the example of national anchoring indirectly proves that there is a need for active chair engagement in socio-political debates (e.g. Swiss company law reform, Responsible Business Initiative) (Schütz, 2020, p. 35).⁶ Pursuant to one interview participant (PI 31), the request for active engagement is an indicator of why there is a so-called roundtable of chairpersons that meets twice a year to discuss and coordinate their positions on specific Swiss policy/governance issues.

After independence, which “occasionally creates friction particularly with major shareholders, but I do not care” (PI 31), and overboarding, “when trouble hits the company, you better be there” (PI 24), the third most influencing factor related to confidentiality. The participants considered the timing and level of information sharing to be critical to a successful appointment. From the short-list, one chairperson in particular did understand that he or she disappointed candidates in the process, but for the person, it was key to have “people who understand the process […] (and not) people who will make a big story out of the fact of not having been appointed” (PI 31). The example demonstrates that the right balance between transparency and confidentiality allows for strengthening “central selection criteria” (Walther, Morner, & Calabrò, 2017, p. 358), accountability (Eminet & Guedri, 2010, p. 560), and fairness (Leube, 2012, p. 211). However, sharing of information always comes with a risk. One interviewee remarked in that context: “You hope that the person will respect this confidentiality. But you have no guarantee. Never.” (PI 34).

In terms of governance, diversity was also expected to have a strong influence. Gender diversity clearly dominates the nomination process (Johnson et al., 2013, p. 238).⁷ There are other diversity aspects that are assumed to have an influence: age (Platt & Platt, 2012), education (Kim & Lim, 2010), and ethnicity (Singh, 2007). However, the expectations could not be confirmed in the underlying sample. Although the tenor towards the application of diversity at the level of the chair was considered positive (Section 6.5), probably following the opinion that diversity is beneficial for the fulfilment of the chair's tasks (Kanadli et al., 2020, p. 592), the survey showed that it is not the most important factor for SPI organisations when it comes to succession. Yet here, too, one has to make an important distinction. One the one hand, the low influence of diversity in the run-up to the election, to which the survey specifically referred, may have to do with the sometimes still limited pool of suitable candidates (e.g. women with relevant board experience). In this context, one board advisor noted that the search for a board chair also involves compromises, although some organisations are willing to address this topic. Since “we all know that the talent pool looks different than our ideal imaginations” (PI 7), it is important to establish non-negotiable (must have) and negotiable (nice to have) criteria. As the current societal focus is strongly on (gender) diversity, diversity is likely to shift from ‘nice to have’ to ‘must have’ in the future, and with it possibly the influence on succession. On the other hand, post nomination diversity influence can have quite a powerful effect. With greater diversity at the chair level (board and nomination committee), the language of the board may change due to nationality, ethnicity, and culture, as well as the next process planned and followed due to age and gender (Kaczmarek et al., 2012, p. 475). It is thus likely that succession will transform in the future with the new generation of leaders at the top.

As the manifold examples showed, governance contingencies limit the number of suitable candidates on the one hand, but positively influence board work and board dynamics on the other. It is therefore essential to keep the big picture in mind and to approach succession in a context-oriented and step-by-step manner (input-process-output). In principle, not as a linear process, but with recurring cycles (reflecting the choice for a particular chair with board composition/board mandates). To conclude, the strict application of governance contingencies in succession enables decision-making (diversity), engagement (independence), monitoring (overboarding), trust (confidentiality), and cultural linkages (Swissness) to be addressed.

RQ2-4: Political Contingencies

Fourth, political contingencies have a (slightly) positive influence. In theory, power, network, and chair influence were expected to impede a professional process (Section 4.3.3.4). By contrast, survey participants believed that the chair’s input and network effects contribute positively to the process, although the answers of the individual groups varied (e.g. networking is emphasised more by state-owned organisations).

Bearing in mind the unexpected results, what are the possible motives for survey respondents’ positive evaluation of the power, networking, and influence of the former chair in the search for a new chairperson? First, referring to political rationality (Zajac & Westphal, 1996a, p. 511), it seems that the chairperson plays a significant steering role in the search for a successor. A particularly strong position for chair involvement seems to exist in state-owned organisations (Section 7.5.2). Contrary to the understanding of merely accompanying the process in order to find someone with “a similar mindset […] (that) helps the company to follow the succession path” (PI 17), the chair often has experience that no one else has. From the perspective of the nomination committee, the chair's involvement in defining the profile and reflecting together on the interviews can therefore be essential. From the candidate’s perspective, the chair also acts as an information point to clarify first-hand questions about the position, the board dynamics, and the future direction of the organisation. This allows the candidate to get a better picture of what the function entails. As a limiting factor, the positive opinion in the survey could also be related to the high number of participating chairpersons in the sample (Section 7.2.1). As board chairs in particular are believed to be strong personalities unwilling to lose control (Kakabadse & Kakabadse, 2007, p. 176), they make careful decisions about their own succession. This may be the reason why “selections rarely reflect on rational assessments, but are the result of complex and interwoven behavioural processes at the interface of nominating committees, CEO’s, [board members,] and board chairs” (Walther, Morner, & Calabrò, 2017, p. 352). Thus, it is said that the chair, in order to ensure his or her own legacy, wishes to influence the choice of his or her successor to find “the solution that is best, better than yourself” (PI 17). Since the successor usually tends to continue the strategic path of the predecessor (e.g. not to sell the organisation to the main competitor), referencing interpersonal influence (Stern & Westphal, 2010), ‘similar type’, ’emotions’, and ‘mindset’ are to some extent the consequence (Section 6.5).

Second, following the team production theory (board perspective) and the teleological theory (process perspective), analysing succession requires context. This is likely due to the social-political-economic embeddedness of the stakeholders in the multilevel system (Kozlowski & Ilgen, 2006, p. 80). To be successful in that triangular relationship in the sense of a strategic calculus for the good of the organisation, a chairperson and/or a chair nomination committee must be to some extent conscious of political power. In this context, Banerjee et al. (2020, p. 378) and Johnson et al. (2013, p. 245) refer to the stigma of social status/social standing that matters. For them, it can be difficult to make radical changes when the person at the top has a weak social standing. This is also probably one of the reasons why government-owned organisations see power most positively among the three groups under study (Section 7.5.2).

Third, to illustrate the rather positive network paradigm effect, the example of Johnson et al. (2013, pp. 244–245), who highlighted the difference between affiliated directors (appointed through business ties), appointed directors (asked to join the board and thus owe the proposing person a favour), and personal directors (friends or family members), serves as a good example. Obviously, the appointed director and personal director clearly violate professionalism, systematics, and transparency. In contrast, a director appointed through a ‘business network’ or promoted through a ‘club of friends’ (Section 6.5), with no intention of gaining personal benefits, has the advantage that either a member of the nomination committee has worked with that person or who knows a person who can be consulted for a reference check (Walther, Morner, & Calabrò, 2017, p. 356). Interview participants thus emphasised that using the network as a resource has the quality of providing advance information about “how this person is acting in ambiguous situations and how this person is acting if he or she doesn’t get what the person proposes” (PI 11). Nevertheless, reference checking is a ‘sensitive topic’ where it is essential to ‘avoid leaks’ and ‘rumours’ (Section 6.5). Leaving aside the famous Swiss compromise for a moment, maintaining the legitimacy of the process is important. Assuming positive intentions, nomination committees use networking as door opener because it allows them to assess the strength of the candidate’s contribution (Stenling et al., 2020, p. 638).

To summarise, despite a multitude of political influencing factors, the thesis interview and survey results concur that the nomination of a chairperson primarily follows a mechanistic search with a systematic and transparent process. The findings thus follow the general belief that planning increases the likelihood of a smooth and positive succession process (Sharma et al., 2003, p. 3; Shen & Cannella, 2003, p. 196). By creating a candidate profile that primarily meets the need of the organisation, the participants emphasised their intention to overcome the former network paradigm through a process characterised by principles and objectivity (keyword the role of the old boys' network; Allemand et al., 2022, p. 786). The diverging result for political contingencies in contrast to the expectations can thus clearly be attributed to the gap between theory and practice. This is also evidenced by the response of one interviewee to the question of whether it would make sense to ask the chair for an opinion in its own succession (PI 25): “In theory, the answer is clear: no. In practice, the answer is as clear: yes.” Following the above arguments and at the same time the theoretical critique, organisations are forced to find an appropriate balance between rational economic and social embeddedness standpoints (Withers et al., 2012, p. 244). In addition to the normative commitment arising from institutional theory, applying a sound balance between both aspects allows combining the best of both worlds.

RQ2-5: Internal and External Key Stakeholders

Lastly, to meet stakeholder expectations, organisations are likely to involve the board, company secretary, and CEO (internal) rather than the shareholders or the board advisory (external). In principle, internal members are prioritised as there should be consensus on the candidate (board and CEO) and appropriate support (legal secretary). On the contrary, if necessary, this can increase the candidate pool (board advisory) and strengthen the understanding of the succession process (shareholders).

For insiders, as “well placed trust’ […] grows out of active enquiry rather than blind acceptance” (O'Neill, 2002, as cited in Roberts et al., 2005, p. 11), there was little controversy about board involvement in the process overall. The primary reason for that was that the AGM proposal is subject to the voting rights of all members (Section 4.3.1.4) and that insider involvement is positively associated with higher post-election performance (Callahan et al., 2003, p. 180). In addition, the chair naturally has a strong influence on the board culture (Gabrielsson et al., 2007, p. 26). Therefore, for the board to be cohesive, the approval of all its members is crucial. Since the chair is part of the board, his or her participation in the process is also encouraged (see political contingencies above). However, with regard to the chair of the nomination committee leading the process, the board chair should only play the role of a sparring partner (Section 6.5).⁸

Besides full board conformance on the profile, following the argumentation of Kakabadse et al. (2006, pp. 144–145), it is also key that the CEO and the candidate are a good fit personally and in terms of business strategy. The primary goal is to overcome paradoxical tensions (Morais et al., 2018, p. 153). As “the worst thing that can happen is when the CEO and chairman start fighting and there is no trust between the two people” (PI 4), a well-thought-out succession process requires strong coordination and collaboration with the CEO and the entire senior management (Shekshnia & Zagieva, 2021, pp. 18–19).⁹ Coordination also includes agreeing on whether the chair should be filled with an internal/external candidate. Specifically related to the chair, this depends primarily on the CEO (Stiles & Taylor, 2002, p. 107). “You need a clear understanding of how you act together” to call it a success (PI 17), another participant mentioned. The consensus here is that incongruence between the nomination committee/board and the CEO in selecting an appropriate successor “is a recipe for failure sooner or later” (PI 23). As a consequence, a CEO dissatisfied with the choice of the new chair could potentially leave the organisation, and the loss of organisation-specific know-how could create a conundrum (Johnson et al., 2018, p. 30; Nyberg et al., 2021, p. 185). Subsequently, it is important not only for the CEO and the rest of the board, but also for the incoming person to feel that joining the organisation as chair is the right decision. “I think, a happy marriage is created when both partners select each other mutually […]. You also have to fully embrace this role. You have to live and love it” (PI 18), as one chairperson summed it up.

Therefore, to summarise the insights provided, both the board and the CEO should interview the candidate(s). To be in line with the inalienable duties of the board of directors (Section 2.1.2) and not to undermine the role of the nomination committee (Pirzada et al., 2017, p. 104), it is recommended to involve the CEO at a later stage in the process and that he or she does not take a (voting) position to influence the process or election (Spencer Stuart, 2020a, p. 15).¹⁰ Yet, since the board has delegated the operational business tasks but remains responsible for all its activities (Section 2.1.2) and the CEO often does not even sit on the board (e.g. financial services), CEO influence is less likely in Switzerland’s hybrid governance system. This reinforces its distinction from the unitary governance system.

The company secretary, by contrast, tends to be excluded from the (interview) process. From one perspective, the partial lack of approval could be related to the fact that in certain organisations, for resource reasons, the chief legal officer often assumes the role of general counsel and company secretary at the same time (e.g. SIKA, Lindt & Sprüngli). From another perspective, the company secretary’s role varies. One interviewee highlighted that the involvement “depends very much on people and in a way the trust the chairman has in a secretary” (PI 32). Whilst some have a very limited role, others are more fully involved in the board and its committees (McNulty & Stewart, 2015, p. 521).

For outsiders, there was greater disagreement on whether to involve the board advisor. Their added value was clearly that they acted as gatekeepers and brought transparency to the process (Schepker et al., 2018, p. 529). For other participants, however, board advisories often provided the same lists of people. “There is very little innovative or courageous thinking, in my view, in the rooms of the traditional search consultants” (PI 31), as one person noted. When comparing the qualitative and quantitative results, it became apparent that participation is best practice for some and less relevant for others. Often, it was a matter of principle whether the consultants were integrated/not integrated. More important in terms of an objective chair search process is “to undergo a proper assessment of the candidates. That is a minimal standard” (PI 16).

With respect to shareholders, participants overall saw little desire to have them actively participate in the process. It must be admitted, however, that opinions varied greatly—often due to the shareholder structure (family, institutional investor, government) and the ownership level (%). Confirming teleological theory, the qualitative and quantitative descriptions showed that it is an integral part of purposeful succession planning to clarify shareholder expectations early on. As the role of the board chair has a (partly) societal focus, it includes constraints that continuously force the organisation to exchange and adapt their practices (Adner & Helfat, 2003, p. 1014).¹¹ However, there are clear boundaries, as the following quote emphasises: “In that sense, as a board, you want to fulfil the expectations of the market and support it in an adequate way. But, I mean, I am not here to tell you that a board should slavishly follow what they hear from investors. Otherwise, the company will be at risk, sooner or later” (PI 16). So the degree of shareholder involvement is a question of how it is deemed appropriate for the specific group at a given point in time (Section 6.5). For them, chairperson succession is clearly a board task to which outsiders have no access.

To summarise, succession affects shareholders and stakeholders differently. For Farah et al. (2020), specifically referring to CEO succession but also to the chair, it is therefore vital to “pay attention to different stakeholders rather than all stakeholders together” (p. 9). As it seems clear that bondholders and shareholders have different interests in the organisation’s operations, or that an insider and outsider successor access different resources in the way they operate, it is also important to prioritise the way in which third parties are involved or their expectations are taken into account. Again, however, there is no unique solution, as it is strongly bound to the context and the organisation.

Table 8.2 Survey – RQ2 Summary of Results

8.1.3 RQ3 Summary and Discussion

Reviewing voluntary disclosure (input-process-output), Table 8.3 at the end of the chapter addresses the results established for the underlying RQ3. The empirical analysis led to the following findings (results review highlighted in grey):

RQ3-1: Economic and Social Governance Motives

To start with, economic governance motives have a high influence on voluntary disclosure. For chairperson succession, survey respondents consider transparency to be an important accountability mechanism (Roberts et al., 2005, p. 18). Therefore, organisations set a specific strategy to meet certain disclosure objectives—which they say they are achieving (78% ‘strongly agree’ and ‘agree’). Beyond that, there is no further need to strengthen current disclosure mechanisms. On the contrary, the social governance motives have a medium effect. Although organisation know that they are in the focus of the public eye and thus strive to meet stakeholders’ disclosure expectations, survey sample organisations pay only medium attention to benchmarking and are cautious about disclosure.

In principle, the two methodological approaches in this thesis show that there is scepticism towards (expanding) voluntary information subject to chairperson succession. The scepticism is due to concerns about added value—an area of general concern in voluntary disclosure (Lim et al., 2007, p. 559). “I think this whole public governance correctness, it is totally going the wrong way because it does not actually create value” (PI 15), one interview participant noted. Another doubted its relevance (PI 25): “I am not sure whether big words in big publicity would really add something. Because in the end, it is the choice of those who have to make it.” Following that, organisations are keen on meeting the dichotomy between stakeholders and competitors but don’t see the need for a reporting-related transformational redesign. If anything, they tend to share the view that minor adjustments to current disclosure mechanisms are sufficient to improve the information base for the shareholders and stakeholders involved. This is another reason why organisations want to avoid potential legal implications (the example of the competence matrix, Section 6.6). To not ‘put in jeopardy’ and/or to create ‘misunderstanding in market’, organisations exercise ‘hesitancy’ and ‘caution’ (Section 6.6; see appendix A6 in the electronic supplementary material). Therefore, in order not to face major risks and external control disadvantages (Ghio & Verona, 2020, p. 59), organisations are rather reactive than active and restrain themselves from responding to shareholder and stakeholder information-related demands. “When we see the roadshow, and they present their slide desk, often you see some information on why the board member was chosen. But usually, they do it when they are attacked by an activist fund. Then the board shows why they are the best board” (PI 36), one proxy advisor commented.

In view of resource dependency theory and disclosure theory, exchange-listed organisations are aware that stakeholders have a right to internal information. To meet evolving expectations of the public (Deegan et al., 2002, p. 319), the primary objective is to link corporate goals (input) and methods (process) with adequate disclosure mechanisms (output). You should “have a five-liner explaining what this person is all about and why it is good for a strategic reason to bring this person on board” (PI 27), agreed another interviewee. In this manner, by indirectly admitting that the quality of information about the board members is low (PI 32, Table 6.8, Section 6.7), interview participants legitimised that current practices are deficient and no longer adequate: “I think we lack transparency in this plan. We clearly lack transparency about the reason why a board member is on the board” (PI 36), as one interviewee put it in a nutshell.

Although organisations want to disclose voluntary information to attract shareholders (investment) and stakeholders (public image), there are clear limits. Against coercive isomorphism (Section 4.4.1), stating that outside pressure forces organisations to adapt their reporting schemes, it can be said that at some point, disclosure costs exceed its benefits (Grossman & Hart, 1980, p. 333). For the chair, reasons include ‘strategic positioning’, ‘discretion’, ‘private information’, and ‘reputation damage’, according to the interview participants (Section 6.6). “It is the famous game of disclosure. Everybody requests you to say everything. At the end you ask yourself: Who is leading? Who is managing this company?” (PI 33), critically reflected one interview participant. Another mentioned that there is a point where “you give and give and give, and it is never enough” (PI 25). Then, at the latest, you have to stop. Stakeholders and shareholders should therefore understand that not everything can be made public.

In disclosure, there is also uncertainty about why the topic of succession and disclosing is important and which sub-items should be addressed in detail (Verrecchia, 2001, p. 142). Uncertainty is also a cause for the fact that succession disclosure has not really been developed. As a result, none of the organisations want to take the lead. This can be briefly illustrated by the conversations (interview), in which participants often referenced to mandatory reporting schemes, and by content proposals (survey), in which they tended to deny specific proposals related to scope and content.

In summary, there seems to be little or no awareness for expanding voluntary disclosure practices. Deloitte’s (2017, p. 43) market survey that analysed changes in disclosure on succession of two consecutive periods confirmed that 69% of large-caps, 62% mid-caps, and 35% of small-caps did not make any changes. When developing information on board chair succession, it must be noted that it is necessary to put more focus on creating awareness to strengthen voluntary disclosure on succession. Promoting independence in boards could be one approach, as it is said to have a positive influence on the transparency level in disclosing (Ghio & Verona, 2020, p. 74). Pressure/demands from the regulator (SIX), from soft law principles (economiesuisse), or from stakeholders (proxy advisor) could be another tactic. However, it should also be made clear that this is not just an issue that concerns the chairperson. Raising awareness would also lead to disclosure implications for the board and the members of the senior management.

RQ3-2: Scope and Content (Person- and Structure-related Information)

Second, by proposing specific scope and content for disclosing information on succession, survey participants clearly prioritised person- over structure-related information. Besides already established factors relating to the person (such as former experience and overboarding), organisations are reluctant to report on specifics about the structural process (such as succession planning and board advisory). For the latter, the majority of participants ticked ‘strongly disagree’ and ‘disagree’ on the 5-point Likert scale.

For person-related information, a clear preference for experience/knowledge and overboarding means that the chairperson’s strengths/advantages and available time frame are highlighted. Considered as a basic premise, the two hard facts are the easiest to handle and therefore the most accepted/prioritised. In addition to a career history, only the number of board memberships need to be reported to meet the (minimum) requirements. However, as one interviewee remarked, “I personally believe that in the outside world, and therefore also at the internal world, companies are focusing too much on the so-called hard facts […]. But those skills and tasks which are more on a soft, on a relational level, they are hard to communicate. Therefore, I think that we quite often have a wrong focus on how chairs are elected” (PI 10). Following the opinion of a chairperson, the focus in reporting should be more on soft skills, not expecting to “have a psychoanalytical description of the individual” (PI 12). However, it is indispensable to know the reasons why and the extent to which the candidate fits the underlying profile for the nomination. A small majority of survey participants confirmed that the extent of voluntariness should be such that the choice can be rationally explained to third parties.

To counter that, another participant noted (PI 24): “Normally you describe, why this person is going to be the best person for the job […]. But for the rest, nobody cares how many people are on the long-list. In the end, people care who is the one who becomes it.” As the exemplary quote regarding the rationale and the profile shows, even if it is the organisations’ intention to provide more background, interview participants rarely referred to in-depth examples that would add crucial value to decision-making. Related to awareness-raising (see RQ3-1), disclosing information should continue to meet the criteria of qualitative utility. In that context, one can refer to Subbarao and Zeghal (1997, p. 62) who, in reviewing annual reports, showed that the word count of items found in staff reports had a high diversity (importance), but a low frequency (incidence). This fact makes it clear that points are being addressed, but with too little depth in terms of content that would allow external stakeholders to make an adequate voting decision. Also, exemplified by the quote in the beginning of this paragraph, it is unclear what is meant by the ‘why’ and the ‘best’ as it can be interpreted in many ways.

All the more, the findings for the structural information level illustrate the inaction towards disclosure novelty perfectly (Section 6.6). Beyond the sphere of naming (Section 4.4.1.2), the reason why the more critical and passive views dominated might have to do with the theoretically justified chilling effect (SEC, 2003, cipher 64). Concrete and detailed disclosure on assessment centres and board advisory or succession planning and process owner could have a disadvantageous effect on collaborations (partners) and/or organisational attractiveness (candidates) (Withers et al., 2012, pp. 251, 269). As a reaction, either the partners refuse to work with the organisation, or the candidates refrain from participating in the process. If this were to happen, it would of course be an advantage for the competing organisations that refuse to do so. Moreover, a second possibility is that it depends on how standardised processes are or how much the process owner/the board wants to rely on them (organic vs. mechanistic search) (Clune et al., 2014, p. 750). If the board wants to maintain flexibility in this respect, it reports the structures used less in order to have more leeway for context orientation/adaptation, which affects succession. Another indicator for this is also that one makes more changes in personnel (board members, chairperson) than in organisational aspects (processes, strategy), since the latter requires stability for sustainable development.

Nonetheless, it seems too easy to attribute all this to one effect. The increasingly negative attitude is more due to the fact that, on the one hand, few organisations are prepared to implement assessment centres. However, for this to be implemented at the chair level, some hurdles must first be overcome. “It also depends on the maturity of the board. To have even a board assessment done is already a big step in certain companies” (PI 19), is one such example. If the nomination committee is not able to implement this first, then, of course, it cannot be reported on. On the other hand, there is no standardised framework for dealing with process communication (Section 5.1). There are organisations that already report on the process steps (e.g. UBS and Credit Suisse), and others could follow in their footsteps. However, this requires the organisations to benchmark, which almost half of the organisations surveyed do not do (see social governance motives, RQ3-1). If there is a systematic process that is proven by the results (Section 8.1.2), this should also be communicated. As it is also about showcasing the organisation and making it more attractive to investors/candidates, the advantages should be emphasised. When organisations refuse to report even though they claim to have a sound procedure in place, this of course may also indicate that succession planning and its procedures are not yet as developed as it has been presented. With respect to that, however, there is no evidence in the survey results that confirm/refute this.

In a nutshell, it can be deducted from the results that it is important to first promote and implement the person-specific level before communicating organisation-specific criteria. However, it needs to be specifically clarified what information is expected and to what extent it should be reported.

RQ3-3: Channel and Time/Timing

Third, as organisations are likely to favour traditional investor-specific channels, ad hoc is also their priority when it comes to time/timing. In terms of channel, the press release, AGM, and annual report were the top three named (in ranking order). For time/timing (second rank), there are no due dates for voluntary disclosure (Ferramosca & Ghio, 2018, p. 196), whereby the point in time strongly depended to the choice of channel. For the survey participants, ad hoc, 3 months, and 6 months were thus the three best points in time to name the new chair publicly (again in the ranking order mentioned).

For both dimensions, as previously remarked in Section 7.6.1, it was obvious that the results were influenced by obligatory reporting principles. Therefore, it should be noted that these results were expected. To interpret the findings regarding the channel, there is one important remark to be made. While it is evident that organisations are strongly oriented towards formal criteria (press release and annual report), the AGM and roadshows in particular offer the opportunity to address the shareholders verbally to explain why the proposed candidate is suitable for chairing the board of directors. Beyond the written content, the resigning chair or the chair of the nomination committee then can explain in person “why, in the current strategy and upcoming strategic movements, it is a good proposition for this person to come on board” (PI 27). For one interviewee it was thus clear that “you will have an important part every time in the speech of the outgoing chairman where he or she talks about his or her successor” (PI 12).

Interestingly, as the examples demonstrated, the organisations are much more forthcoming when it comes to addressing the ‘why’ verbally. While written explanations are met with hesitation (see above), participants see the advantage of a face-to-face exchange in being able to provide more detailed background and relate to the context. However, referring particularly to the AGM, the ultimate benefit is questionable. Since the majority have chosen an independent proxy, physically represented shareholders often only account for a fraction of the total voting rights (around 1%) (Inrate, 2020, p. 2). Thus, through the low physical presence at the AGM and the preliminary discussions with the anchor shareholders, the channel is not important for the interviewees. “What is also true, and you may not like it, the very moment the new candidate is published, it is closed. The decision has already been made anyway” (PI 12), as one person reasoned.

Despite studies examining the use of web interactivity and modern platforms for information services in (human) capital reporting (e.g. Heinze & Hu, 2006; Striukova et al., 2008), the survey’s emphasis on traditional, investor-specific channels demonstrated that mechanisms for reporting on chairperson succession tend to be conservative and that technological adjustments depend on regulation. Few opinions were positively directed towards modern alternatives such as the web/internet (Xiao et al., 2004) or social media (Leitch & Sherif, 2017). “Social media has the power to kill people for no reason. […] This is creating more disinformation and fake news than providing solid support to decision-makers” (PI 27), was one opinion why modern channels found little support among participants.

In terms of timing/scheduling, it is important to catch the right moment. On the one hand, a decision communicated in advance shows that the succession is being approached systematically. In that case “everybody can be prepared and informed. Then you have time for the roadshow” (PI 34). Being prepared and looking ahead is important because “there are two things that the market does not like: one is surprises, and the other is insecurity” (PI 24). On the other hand, an early announcement, of course, also means that the process of finding a successor is initiated. Such an announcement can lead to a dynamic in the board that is not conducive to cooperation (e.g. lame duck, Section 6.5). One participant thus clearly emphasised keeping the time horizon as short as possible. “Once the new chairman was nominated, the old chair had already mentally disengaged” (PI 32), as one person reported from his/her own experience.

Principally, time/timing is closely linked to the choice of channel (Section 4.4.1.3). With respect to that, scholars have claimed that the delay of disclosure creates a greater positive market effect (Guttman et al., 2014, p. 2416) or that more complex businesses have longer reporting lags (Sengupta, 2004, p. 475). In the underlying survey sample, which was specifically related to the chairperson, the findings of the two prior studies related to senior management could not be confirmed. For the participants, the closer the time/timing of the AGM, the less ‘noise’ it creates, “because what you do not want most of the time as a chairman, is for it to get noisy around the chair position. That is what most chairman try to avoid at all costs” (PI 24). However, from a strategic point of view, the time/timing should be as close as possible to the AGM in order to still have enough time to talk to the relevant stakeholders and introduce the candidate.

To summarise, as one factor conditions the other (and vice versa), channel and time/timing are closely linked. Organisations motivated by a regulatory and conservative mindset are less likely to adopt innovative/alternative concepts, but instead rely heavily on historically established practices. Here, it is not only important to address stakeholders appropriately, but also to tackle internal organisational practices in the best feasible way (e.g. board policies).

Table 8.3 Survey – RQ3 Summary of Results

8.2 Implications for Academia

The doctoral study contributed to board theory, role theory, process theory, and disclosure theory, outlined in Chapter 3.

In relation to board theory, the dissertation primarily aimed to make a further contribution to dismantling the fortress of board governance research: the black box of board succession planning. This study integrated a multi-theoretical approach that goes beyond a pure agency problem. For the purpose of broadening the view and implementing further perspectives, the following theories were applied to the structure of the research questions: stewardship theory (RQ1), resource dependency theory (RQ2), and stakeholder theory (RQ3). Moreover, social integrative methods such as behavioural theory and team production theory were also incorporated to explain the essential connections and link relational dynamics—something that prior research failed to do (Walther, Calabrò, & Morner, 2017, pp. 2212–2213). In addition, the pursuit of a multi-theoretical approach allowed answering research questions on the integration of social factors into the realm of governance concerning the board chair (van Ees et al., 2009, p. 307).

Second, the conceptualisation of role theory enabled an understanding of the roles, tasks, and respective competences required of the chairperson. The thesis showed that the chairperson fulfils multiple roles. By applying the concepts of the Organisational Role Analysis and The Competing Values Framework, the thesis reflected the normative expectations and internal socio-technical and external environmental systems within the multidimensionality of competences. Beyond that, the concepts of Board GPS and the Competence Model enabled an in-depth definition and delineation of role, tasks, and competences. Interlinking all the theoretical role concepts, it was possible to identify the unique set of chair competences and compare them with those of an ordinary board member. All of this contributes to finding answers to the why, what, and how of the actual behaviour of the board or board committee (Leblanc & Schwartz, 2007, p. 845).

Third, “great inferential leaps are made from input variables such as board composition, to output variables, such as board performance, with no direct evidence on the processes and mechanisms which presumably link the inputs to the output” (Pettigrew, 1992b, p. 171). As called for in the quote, process theory enabled interlinking the succession paths of chairpersons conceptionally (input-process-output) and chronologically (catalyst to AGM). By integrating the related teleological theory, the thesis demonstrated that process moderators exist. Consequently, organisations are required to adapt their practices to meet constraints and expectations. The example of adaption demonstrated that succession processing is cyclical rather than linear. As there is no such thing as the process, it requires context to justify the embedding of personal, group, and organisational activities (Minichilli et al., 2014, pp. 1153–1154; Walther, Calabrò, & Morner, 2017, p. 2208). Since the board is seen as an open system with human interactions, the work followed Pettigrew's (1992b) call to integrate internal and external perspectives into process thinking. Knowing the expectations of key stakeholders enables to improve the decision-making basis for the process owner (chair nomination committee) and the ultimate voting parties for the AGM proposal (board of directors) (Huse, 2009a, p. 3). In summary, by including process theory, the thesis has made a valuable contribution that goes beyond the academic “publish or perish” syndrome with a pure input/output focus (Huse, 2005, p. 66).

Fourth, disclosure theory practices enabled to extend the liaison- and co-opting function of a chair’s role, where, according to Huse (2018, p. 31), a value-creating board approach is necessary to connect to ethical- and stakeholder engagement. By explaining the conundrum of chairperson succession to outsiders through outbound communication, organisations actively contribute to legitimising their (board) activities. After confirming the underlying assumptions (e.g. recognition of accountability) and delving into prospective implications (e.g. litigation claims), the dissertation also described how the theory is interlinked with the organisational reaction.

Fifth, beyond applied theories, the dissertation also aimed at contributing to the emerging literature on boundary conditions of succession (e.g. Giambatista et al., 2005; Minichilli et al., 2014). Anticipating that this could lead to a new stream in contingency theory, the micro- and macro-level determinants specific to succession are difficult to handle (Olson & Adams, 2004, p. 426). The more knowledge that is gained about whether and how strongly such contingencies operate, the better they can be understood. The doctoral thesis therefore attempted to provide further insights into this promising field of research.

Lastly, the thesis in general contributed to broadening the landscape (demographically and in terms of content). Since boardrooms deal with private information, the use of primary data via exploratory interviews and a confirmatory survey uncovers inner working processes and extends the majority of secondary, publicly available data studies (Adams et al., 2010, p. 31). Using the chosen theoretical approach, the dissertation primarily followed three board governance trends (Huse, 2018, pp. 19–20): (1) to focus on board responsibility, value creation, and strategic planning; (2) to emphasise board work beyond a pure shareholder perspective such as ethics, accountability, and responsibility; and (3) to rethink board evaluation and board performance activities.

8.3 Implications for Practice

The empirical part of the dissertation allowed deriving several insights for chairpersons, head of nomination committees, and governance experts.

Overall, the interview and the survey exchange with Swiss business personalities achieved two things in particular. On the one hand, it encouraged the participants to analyse the subject in detail and to keep succession at the top of the agenda. On the other hand, it transmitted impulses to reflect on process habits and to adjust them to the changing governance landscape—not just once or twice, but on an ongoing basis. An indicator that the topic of board chair succession was met with interest by the participants is the behaviour of one interview participant (mid-cap) who postponed the subsequent appointment to be able to answer all questions of the questionnaire adequately.

Second, the outside world still perceives chair election as a “strange little dance” that is strongly influenced by personal networks and social dynamics (Clune et al., 2014, p. 777). According to the French proverb c’est le ton qui fait la musique, the doctoral study showed that it requires active engagement to prove that succession planning is formalised, rigorous, and rational (Schepker et al., 2018, p. 546). By that, as Weisblat (2018) perfectly put it, “changing goals, including succession plans, must be regularly disclosed to all stakeholders in order to minimize uncertainty about the future of the organization. While the number of disclosed details is open to debate, one thing is clear: transparency is key” (p. 20). There, as the insights showed, providing a static checklist is no longer sufficient (Pye, 2002, p. 9). To address the “impatient and faceless owners” (Huse, 2005, p. 70), it is necessary for organisations to support the view of “the enemy of my enemy is my friend” (Campbell et al., 2012, p. 1447) and ultimately to provide “lived experience” (Roberts et al., 2005, p. 23). By following transparency concerns, the work of succession makes more sense, is more understandable, and is positively acknowledged by the market. But above all that, shareholders know and believe that the nomination committee takes its responsibility seriously (Molitor, 2010, p. 164).

Third, “there is an abundance of literature describing the best practices that companies and boards should adopt […]. However, we still know little about how companies are reacting to these recommendations” (Roy, 2008, p. 39). In particular, the suggestions on voluntary disclosure provided practitioners with ideas on how to communicate rule-based process structures and competences. In this sense, the dissertation produced (contemporary) best practice inputs on behavioural board governance and thereby followed the research call by showing how organisations responded to such proposals. It thus went beyond the simple description of best practice principles, as criticised by Roy (2008). More than that, with specific focus on the quantitative analysis, the inferential statistics results also differentiated between different types of organisations (market capitalisation, shareholder structure, and board experience).

Fourth, by adopting a mixed-methods design, the study followed the unconventional, non-mainstream body of research that draws on both practice and theory (e.g. Machold & Farquhar, 2013; Maitlis, 2004). Through the envisaged methodology and the intention to gain in-depth insights, the quantitative findings of the work and the qualitative discussion are expected to offer guidance for Swiss policy makers to further deal with succession planning regulation.¹² Thus, the study enabled SIX, FINMA, and economiesuisse to reflect on what kind of policies might be acceptable from an organisational perspective in light of potential new regulation. In this sense, it provides initial ideas for the direction that upcoming regulations may take. With reference to the specific regulators, to summarise, it should also be emphasised that the study was one of the few to provide insights into succession planning for Swiss exchange-listed organisations (hybrid board governance structure).

Fifth, it was also demonstrated that in succession planning, forward-thinking and long-term planning is crucial. Especially in view of the prominent position of the chair. For practitioners, thus, it is important to keep an eye on the timing and time horizon. However, as there are many stakeholders with different (conflicting) interests, it is also key to pay attention to third-party influences. If the process owner is able to oversee the multidimensionality that corresponds to governance practices, shareholder and stakeholder expectations, and regulatory requirements, the succession process will be recognised as professional and objective.

Lastly, by addressing specifically in- and outsiders, the doctoral research highlighted the following implications/recommendations for actions for the stakeholders and shareholders under study:

• The chairperson can participate in the process, meet candidates, and contribute essential input to the nomination of the candidate. When it comes to process responsibility, profile description, and long-/short-list decision-making, due to independency and personal biases, the board chair should not take the lead. Even if the chairperson is willing to make the ‘best possible’ handover, the person should have confidence in the chair nomination committee/board to have the competence to ‘choose right’.

• If a nomination committee has been formally established, its chair heads the process planning. The committee should manage the timeline, establish a candidate profile, contact advisors (if appropriate), explore and determine a candidate long-list, and coordinate the results with the full board of directors. With regard to succession planning, the chair of the nomination committee is the primary person to contact. Given his or her role, the chair should act as a strong personality and consciously take on the responsibility that has been assigned. If the process deviates from best practice due to influencing factors, it is up to this person to show strength and restore transparency/objectivity.

• The company secretary shall primarily have a supporting role for the chair nomination committee and/or the chairperson. The supporting function relates, on the one hand, to the process structure and, on the other hand, to the rigorous reporting of planning, strategy, and process execution. If there is an enforcement (FINMA) or a complaint (shareholders), the company secretary is responsible for ensuring that the process is fully protocolled and that all files are substantial and complete. Participation in an interview is rather not required.

• The CEO should be integrated into the succession process. At planning level, the origin (internal vs. external) and timing of the process (point in time for succcession) for the search of a new chairperson should be coordinated with the CEO. At process level, the CEO should comment on the profile and interview the candidate, but without assuming any decision-making influence. Since a complementary constellation between the CEO and the chairperson is crucial for the success of the organisation, the CEO should have the courage to openly share the criteria for a good partnership. This allows to build the essential relationship structure necessary for the organisation to continue thriving.

• Board advisory consultants can be part of the process. If engaged, by acting as a gatekeeper, it is the advisor’s responsibility to provide process input, to enlarge the field of candidates, and to promote transparency and fairness. The long-list candidate proposal can be out of the box, without losing sight of the predefined profile, and its focus should be on person- and not only on work-related competences. Beyond the usual industry suspects, personalities without a ‘top-tier’ position but with profound knowledge can also be candidates.

• Shareholders should be able to express their expectations. To strenghten understanding, organisations should strive for transparency by providing adequate succession-related information. However, shareholders need to understand that there are clear limits to what information can be shared externally (thresholds) or that non-disclosure agreements need to be signed (NDA). Though, to emphasise the importance of succession, shareholders must more rigorously demand profile- and process-related information.

8.4 Research Outlook

Since still “little research is available to inform succession planning practice” (Garman & Glawe, 2004, p. 123), the doctoral study intended to provide initial insights into the realm of board chair search. Through the in-depth analysis, several (future) research avenues could be identified:

To begin with, in order to address and understand current practices, the thesis focused particularly on the opinions of the chairperson and the nomination committee chairs. Although other stakeholders were included for interview purposes, the results are based on the board's perspective. However, it would be interesting to consider the multiple perspectives of key stakeholders referred to in this thesis. For example, what family and institutional/activist shareholders specifically expect in succession (Hillman et al., 2011, p. 675). In that field, apart from composition, little research is known about key stakeholders’ expectations of the process (Nicholson et al., 2000, p. 14). Further research could thus analyse what specific attributes and at what stage of the process stakeholders should best be addressed.

In addition, current insights into what is ‘good/bad’ are related to the persons who plan the process themselves (e.g. chair nomination committee). Evaluating one’s own area of responsibility often results in biases (e.g. in the search for the ‘easiest’ or ‘best’ candidate; Walther et al., 2015, p. 23). A second research focus would therefore be to look at the opinion of the board advisor, consulting the manifold organisations. By doing so, current planning pitfalls could be detected by a broad market review and instructions for actions could be derived accordingly. The results could be implemented by the advisors and thus support the organisations as a whole in the question of how to approach succession planning.

Moreover, as shown in the non-parametric quantitative analysis, there are discrepancies between size and block holding structures. The thesis’ intention to address this as a prospective (new) field in research—do discrepancies even exist? – may serve other research fellows to investigate the phenomenon in detail. This would allow, from a theoretical point of view, to close the knowledge gap(s) and, from a practical point of view, to provide recommendations on how to best address the two contexts in chairperson succession (Ho, 2005, p. 218). For block holding structure, Switzerland is a prime example for research as individuals/families often hold substantial stakes. Extending the research to various governance systems, such as those of the USA and the UK (unitary) and those of Germany and Austria (two-tier), and to specify process drivers, such as the famous lead independent director in the UK, may be another stream to focus on (Pye & Pettigrew, 2005, p. 31).

In fact, this thesis has shown that the succession process is more rigorous and systematic than it was a few years ago, since organisations are increasingly concerned with integrating key stakeholder demands and implementing best practices (e.g. Clune et al., 2014; Conger & Lawler, 2001; Korn Ferry, 2009). However, the survey sample described in Section 7.2 showed that the results in this doctoral study are specifically determined by the cited organisations with a nomination committee that are keen on implementing systematic structures (assuming that the formality of the committee has an impact on the systematic nature of the processes, Section 4.1.2). Since only a few organisations without a nomination committee took part in the survey and 30% of all market organisations do not have one in place yet (Sections 2.1.3 and 7.2.2), this suggests that the current tendencies to speak of a mature and well-established process is not yet sufficient in all SPI organisations. If this assumption is correct, it would also significantly limit the result of the survey in which participants were asked to state how adequately they experienced their last chairperson succession process (Figure 7.9, Section 7.3.1). The same applies to the background that the study focused on listed organisations, which are usually subject to strong political correctness.¹³ As venture capital or private equity-driven organisations are much more performance-oriented, it would be interesting to investigate how this affects board chair succession. Addressing one of the limitations of the doctoral thesis by conducting a second study, namely including SPI organisations in a larger sample or extending the focus to all Swiss organisations (stock-listed and family owned), would allow for more statistically sound results.

In addition, public expectations have increased ESG in organisations. With the assumption that governance (‘G’) sets the tone, the emergence of ESG as a corporate guiding factor will continue to gain momentum in board research. New fields of research will open up and academics from different disciplines will join forces. By the context of its wider audience, e.g. greater stakeholder and shareholder demand, Eminet and Guedri (2010) emphasised that it is “necessary to reform the way in which directors are appointed” (p. 558). For the chair specifically, new ways will be explored to determine whether and to what extent a chair can add value and how it affects the board as a whole. Further opportunities in this respect may relate to the question of how modern technology, data analytics, specific applications, personality checks, and planning factors may improve the succession process and thus strengthen its transparency and objectivity.

Despite the reliability and validity of the doctoral study, the research results are snapshots (Section 7.7). As the market is dynamic, the “corporate governance system continuously adjusts and improves in response to failures” (Olson & Adams, 2004, p. 424). Highlighted by the Swiss corporate law reform (revCO), the possibly upcoming revisions of the Stock Exchange Rules (DCG), and the Best Practice Code (SCBP), it is necessary to conduct another research study at a later point in time. Having the opportunity to address related questions, as this doctoral study has done, it is possible to compare the results over a certain time horizon and check whether and how quickly progress has been made.

To sum up, overall, the dissertation has provided a first impulse for further research on chairperson succession. As additional research in the field of the chairperson is needed to fully explain its dimensions/dynamics and, even more importantly, to put the results obtained into perspective, it sought to encourage other researchers and Ph.D. fellows to overcome the challenging barriers for access to boards and confidential data.

8.5 Concluding Remarks

“A good or bad Chairman can make all the difference. The rule of the game is that you have to add value.”

(The Change Partnership, 2016, p. 6)

To conclude the doctoral thesis, implied by the empirical results, there is no such thing as a world-class chairperson. There is, however, in the words of Atwood (2020), the need of “having the right people in the right place at the right time” (p. 2). In principle, the one person who is best suited to add value in this function. To make such a nomination, though, it is important to link succession planning to the specific situation and context in which an organisation is embedded. As it is sometimes the irrational that drives a process (Section 6.7), it has been demonstrated from an academic and practice-related point of view that it is essential to understand, manage, and address such traits if they occur. In terms of chair succession, the doctoral study has thereby accentuated the relevance of defining competences, mastering key process contingencies and key stakeholders, and providing voluntary disclosure.

While introducing the topic (Chapter 1), the focus was on the question of what the driving factors are “to chase that phantom” of chair selection (Olson & Adams, 2004, p. 422). Although academics and experts with practical experience agree that the position should be held by a person with decent rational economic- and socio-emotional skills (Withers et al., 2012, p. 244), it was mentioned that apart from the information about which person holds the position, there is little awareness of the dynamics that occur around the election. In the absence of clear regulatory guidance (Chapter 2), organisations thus used their leeway to structure their own work processes. This corporate freedom of action led to a mismatch between shareholder/stakeholder expectations and organisational performance/ results.

Considering board theories, role theory, process theory, and disclosure theory (Chapter 3), the thesis showed how the chair is embedded in the diverse shareholder/stakeholder environment and what it takes for the person to perform the function. In delving into to the topic of chair succession planning (Chapter 4), the study demonstrated that there is agreement on the essentiality of the succession process. Nevertheless, in practice, too little attention has been paid so far to due diligence and, too much attention has been paid in academia to the outcome (output) instead of the context (input) or the decision-making structures (process). As a consequence, eight research gaps were identified and these were summarised in three research questions (Chapter 5).

By using a mixed-methods design to address the question of how exchange-listed organisations master and accomplish chair succession, the empirical approach of the doctoral study with interviews (Chapter 6) and a survey (Chapter 7) provided insights into how to deal with the process systematically, transparently, and in the spirit of good governance/ best practice. The results achieved were then discussed and put into perspective from an academic and initiatory viewpoint (Chapter 8). All chapters thereby followed the three-pronged input-process-output design.

In summary, with respect to (1) competences, (2) moderators, and (3) disclosure, readers can take away the following insights from the doctoral thesis and the RQ under study:

• (1)

  • The variety of roles and tasks of a chairperson is significantly driven by theory, personal perception, and organisational context.

  • The competence profile for a chair is broader and more diverse than that of an ordinary board member.

  • To meet roles, tasks, and profile expectations adequately, the board chair should have strong personal (integrity and authenticity), leadership (stamina and stewardship), and business competences (strategic thinking and board literacy).

• (2)

  • A succession process is complex, should be planned long-term and systematically, and follows transparency and fairness.

  • For the planning and processing, governance (independence and confidentiality), business (board structure and strategy), environmental (industry and market dynamics), and political contingencies (networks and chair influence) are the driving dimensions. To address them specifically, they should be considered.

  • Stakeholders should be involved/their expectations addressed in a way that is appropriate for the specific group and the point in time/step in the process, with preference for internal (board, senior management/CEO, company secretary) over external stakeholders (board advisory, shareholders).

• (3)

  • Current disclosure regarding the succession/candidacy nomination is vague. Shareholders often do not know specifically why the person proposed to the AGM is the most suitable.

  • Tough organisations agree that it is not enough to provide a CV, they are sceptical and clearly see limits to what they are willing or able to report.

  • If organisations agree to disclose, they clearly prioritise person-related (candidate profile, experience/knowledge, overboarding, reason/rationale) over structure-related information (assessment centre, board advisory, process owner, process steps, succession planning).

  • As the topic of succession disclosure is a novelty, raising awareness by hard law/regulators, soft law, or stakeholders is needed first.