Everyone knows what the chairman does.....right?  Well, perhaps not!

Caller: "Hello Mark – we are going to lose the independent chairman of our pension fund trustee board shortly and I thought you might be able to suggest a few names we could consider to replace him."

Me: "Well quite probably yes; but first I need to understand what you are looking for."

Caller: "A new independent chairman, just like the incumbent; it's as simple as that."

The succession to a new trustee chairman presents a golden opportunity to step back and evaluate whether introducing some changes to existing practices might be governance enhancing. But where to start?

There is no definitive 'authorised' profile for the role and nor is there a great deal by way of formal guidance. But we don't need to look far outside the world of pensions to find some. The FRC (the Financial Reporting Council is responsible for the UK Corporate Governance Code) provides instructive guidance to the corporate board chairman and whilst there are clear differences between the composition and responsibilities of corporate boards and trustee boards, they are far outweighed by the striking similarities. Here are just a few items from the FRC's guidance that might prompt constructive thought about the role of the chairman of trustees:

Setting a board agenda which is primarily focused on strategy, performance, value creation and accountability, and ensuring that issues relevant to these areas are reserved for board decision. In other words, the chairman should take an active role in ensuring that the agenda optimises the use of valuable board time to focus on those things that that make a real difference to outcomes. In the pensions context, strategy and performance would relate to funding and investment strategy whilst value creation might be interpreted as value management.    

Making certain that the board determines the nature, and extent, of the significant risks the company is willing to embrace in the implementation of its strategy, and that there are no 'no go' areas which prevent directors from operating effective oversight in this area. With the exception of substituting "board" for "company", this translates directly into the trustee board world.

Regularly considering succession planning and the composition of the board. The common practice of ceasing accrual and setting pension schemes on a path to eventual 'end game' transforms the trustees'' priorities and with that the skills required. It is not just reasonable but desirable that the chairman should influence appointments to ensure the board has the capability to meet changing demands and new challenges.

The chairman is hugely influential in delivering success and in a changing world the demands on the chairman will change too.  So take opportunities when they arise to question if the role of the chairman needs to change.  If you are looking for more food for thought then why not use the FRC guidance to stimulate your thinking? Just click here for more info.

Written by Mark Hodgkinson, director at Muse Advisory.