Chairman's Job (A): Ups and Downs in the Board Room

Two young Russian entrepreneurs create a sizeable and profitable construction business through a series of acqusitions and restructuring efforts. As it begins to grow at high pace, they seek to create an effective system of corporate governance. They engage the ex-CEO of an investment company as chairman of the newly formed board with a majority of independent directors. The case describes his leadership, challenges, achievements and mistakes, showing how an effective board emerged from collective actions of its directors. The effectiveness of the board and the chairman's leadership are tested by a PR crisis provoked by a media interview given by the latter.

The objective of this case is to foster a discussion about the role and actions of the chairman of the board at different stages of board developemnt and in different contexts. It describes how the board is formed and becomes operational, how it becomes effective, deals with a crisis, and how the chairman contributes to the process. It also provides an opportunity to look at the succession dynamics and the roles different stakeholders play in the process. The case could be used as an in-class individual exercise where participants propose alternative ways of leading a board's formation, development and crisis management, or as a basis for a group discussion about the chairman's leadership, board process, management-board interaction and crisis management.