Dennis Carey and Robert Hallagan are Korn Ferry vice chairmen and co-leaders of the firm’s Board Services practice.

It’s the kind of figure that gets attention—for the first time, more than 50% of the S&P 500 firms have separate CEOs and board chairpersons. But as milestones go, this one may be misleading.

Major pension funds and activists have been pushing for this movement, believing the separation of titles leads to enhanced shareholder value. That’s not something we’ve found any documented analysis on. What we have observed—and what matters most here—is that there are two key pillars that do correlate to long-term shareholder value: an exceptional CEO and exceptional independent board leadership.

Strong, independent board leadership can take the form of a lead director as well as a non-executive chairman, whichever is best for the company’s situation. For instance, separating the roles could put the CEO of a multinational corporation at a disadvantage when dealing with political leaders, peers, and major customers outside the United States. And, in many cases, having the board chairperson be someone other than the current CEO doesn’t automatically create an independent board leader, because the role often is given to the company’s recently retired CEO. We think that if a lead director’s responsibility is defined properly, it should be indistinguishable from a non-executive chair.

Finding Independent Board Leadership

There are now well-established CEO succession processes, assessment tools, and research that help a board ensure it has the “right CEO at the right time.” Board leadership needs the same thoughtful, disciplined approach. Exceptional independent board leadership is not achieved by accident, and ineffective board leadership can destroy value. Choosing the right person for a board leader role—whether it’s as a lead director or as board chair—first requires determining the most critical and toughest challenges the company may face over the next three to five years. Will there be a CEO succession? What’s the likelihood of an activist stakeholder arriving on the scene who will want to deal directly with a lead director? Is there a need to enhance the board’s effectiveness or refresh the board’s membership? Does the company need a strategy transformation? These types of challenges are complex and require a high level of leadership competency. Not all board members would make exceptional board leaders and, unfortunately, the individuals that raise their hands the highest and politic for the position usually are the wrong choice.

In our experience, the qualities and competencies of an effective independent board leader include:

• Being self-effacing but highly accomplished—a “level 5” type of leader who is respected by the CEO and the entire board
• Having a track record of success in making complex decisions
• Having high intellectual horsepower
• Having exceptional collaboration and team-building skills (the board is a team)
• Having impeccable ethics and integrity—he or she engenders immediate and enduring trust and confidence
• Being a great communicator to people at all levels
• Being inspiring and wanting to win but never wanting or needing the spotlight
• Having a history of attracting, energizing, and mentoring top talent
• Having a cool head under pressure

What’s Next for Your Board?

If we can all agree that exceptional independent board leadership is the key driver for success, and if we can also agree that it takes an exceptional leader to achieve, then we leave you with these questions:

• Do you have a robust, long-term succession plan for your board leadership?
• Do you have strong potential board leaders in your pipeline?
• Have you defined the board leadership roles clearly and weighed the importance of each role?
• After discussion of the roles, have you gained consensus around the ideal competencies of a board leader, just as you would your next CEO?
• Have you done a thoughtful evaluation of your board leadership? And is compensation for the board leader fair, motivating, and aligned with shareholder value?