Boards

In the past three months, I’ve been invited to come on as many boards. I take such things seriously and declined in each case. If I don’t have the fire in the belly for it and won’t give a hundred percent, I don’t think it’s right to occupy a chair. The concept of boards for organizations and companies looks great on paper. Unfortunately, it often smashes upon the rocks of reality. A board should be an independent group of people who oversee the management of the entity, ensuring that business is conducted in a competent, moral and legal manner, congruent with the bylaws and mission. I see two areas where this often breaks down, starting with “independent.” CEOs sometimes sit on each other’s board. The tacit agreement is that, “I’ll support you in your company if you return the favor.” Or, the pay and/or prestige is attractive enough that the board member will accept the position with an understanding that he/she will not be intrusive and will rubber stamp whatever management wants. In any case, the required independence and objectivity is undermined. Somewhat related is that many people want and seek board positions for the prestige and perceived power, or how it dresses up a resume. However, they are unwilling to put in the requisite time and effort for delving into the entity and its field. Or, they are averse to challenging anything an established CEO cares to do. The result of the dilettante boards is the management can essentially operate without accountability. That’s why you constantly see management of charitable organizations lavishing excessive salaries and perks upon themselves or companies marketing substandard products. I believe that what is at the root of this is director & officer liability insurance. Coverage is almost of a blanket extent, protecting lapses in responsibility. In other words, there isn’t much downside in being lax or compliant. The solution is to restrict the limits of that protection so a director does have skin in the game. I believe that would eliminate those who take the appointments or duties casually.