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for dealing with nonperforming directors
deselecting, or not recruiting troublesome directors in the first place
have become far more important tasks for the board.
By Ram Charan, Dennis Carey, and Michael Useem, authors of “Boards That
Almost all directors look promising before they
enter the boardroom,
but not all perform equally well once inside. In our experience, as
many as half of Fortune 500 companies have one or two dysfunctional
directors. Not infrequently, an intimidated management ends up
kowtowing, fine-tuning its presentations in the boardroom to anticipate
the difficult director’s reactions or consulting with the director in
time-consuming ways accorded to no others. It becomes a drain for
everyone involved — except the dysfunctional director. Let us be clear.
We are not critical of directors who disagree with management strategy
or voice alternative directions. We are not even talking about hostile
directors sometimes forced onto the board by a hedge fund trying to
take control of a company or about partisan factions that have formed
for whatever reason.
Pictured in photo, left to right: Dennis
Carey, Ram Charan and Michael Useem
Dysfunctional directors have their
own modus operandi. Some see themselves as the smartest person in the
room, others seek recognition, and still others are frustrated would-be
Into Dark Alleys
personal motives, they tend to micromanage or take boardroom
discussions down dark alleys. We have seen a director interrupt the
first five minutes of a CEO’s boardroom presentation and sour the mood
of both board and management for the remainder of the day.
The result is to impair, even negate, a board’s
capacity to lead the
firm. As in any group, a dysfunctional member can sabotage the entire
In the Current Issue:
Third Quarter 2014
Invited to Join a Bank
There are compelling reasons to accept, but sobering risks come with
Antidotes To a Board's
Boards must constantly self-renew because great governance requires
directors who are on top of their game.
Board Vetting in the
The definition and mechanics of ‘background checking’ have changed over
the years, but the guiding principles of full and forthcoming
disclosure remain the same.
In This Month's e-Briefing:
for a free subscription)
Governance Book of the Year: “Boards That Lead”
Our selection is a compelling account of a new leadership model for the modern corporation.
By Jim Kristie
Just as I had finished up last month’s e-Briefing, the Financial Timescame out with its short list for the best business book of the year. The winner will be announced later this month.
We have our own best business book award here at Directors & Boards —
for the best governance book of the year. The winner in 2013 was
“Boards That Lead,” by Ram Charan, Dennis Carey and Michael Useem. We
announced it in the Governance Year in Review special issue.
Published by Harvard Business Review Press in
December 2013, “Boards That Lead” came in right under the wire for
consideration as the top governance book for 2013. It was the clear
champion. Subtitled “When to Take Charge, When to Partner, and When to
Stay Out of the Way,” the book offers a compelling account of a new
leadership model for the modern corporation — one in which decisions
that once belonged solely to the CEO are now being shared with the
board as directors take on greater leadership roles in the
organization. Adding even greater value, “Boards That Lead” tells the
inside story behind the successes and pitfalls of this new leadership
Readers of the print edition of Directors & Boardshave
already gotten a good sense of the book’s content and value from an
excerpt that we published in the First Quarter 2014 issue and from an
interview with co-author Mike Useem that was a key feature of the
Governance Year in Review issue.
To give our e-Briefing readers
a taste of the book, we include as the Article of the Month in this
November newsletter a few key passages from the published excerpt, and
revisit the Q&A with Mike Useem as this month’s Columnist spotlight.
This is the fourth year that Directors & Boards has
chosen a Governance Book of the Year. Our initial designation went to
2010’s “Money for Nothing,” by John Gillespie and David Zweig, an
excoriating analysis of the state of corporate governance — as its
subtitle reveals: “How the Failure of Corporate Boards Is Ruining
American Business and Costing Us Trillions.” Whew!
best book for 2011 was a less harsh visit inside corporate boardrooms,
“Great Companies Deserve Great Boards,” by Beverly Behan — subtitled,
“A CEO’s Guide to the Boardroom.” And in 2012 we selected for honors,
“The Shareholder Value Myth” by Lynn Stout — a return to the dark side
of governance, as per its subtitle: “How Putting Shareholders First
Harms Investors, Corporations, and the Public.”
are worthy of close reading, and if our Governance Book of the Year
designation helps bring each of these works a bit more attention then
we are pleased to be in a position to accomplish that.
As always, I welcome your comments at firstname.lastname@example.org.
Jim Kristie is the editor and associate publisher of Directors & Boards.
Click here for a permalink to Jim's article.
Click the link below
to read more.
Events of Interest to
December 4-5, 2014
KPMG’s 24th Annual
Accounting and Financial Reporting Symposium provides corporate
executives with the latest insights, thought leadership and newest
information on critical issues and developments affecting financial
decision making, including year-end reporting activities. Pulitzer
Prize-winning journalist Bob Woodward will serve as a keynote
speaker for this CPE-eligible program. Sessions will include
implementing the new revenue recognition standard, current FASB
developments, accounting for leases and financial instruments, as well
as sessions on managing risk, COSO, an SEC update, and a Washington
outlook. The program will be held at the Venetian Hotel in Las
Vegas. Visit KPMG’s Symposium website to learn more and to
December 18, 2014
Yale CEO Leadership Summit will be held at the Waldorf-Astoria Hotel in
New York. Under the direction of Prof. Jeffrey Sonnenfeld, senior
associate dean of executive programs at Yale School of Management and
founder, president and CEO of The Yale Chief Executive Leadership
Institute, the program brings together prominent CEOs and other
business and market leaders for highly interactive peer-driven
educational discussions. This session's theme is "The Global CEO and
Local Sensitivities: Leading at Once as Diplomat, Patriot,
Entrepreneur, Financier, and Indistrialist." For more information,
email Joe DeLillo at email@example.com or visithttp://celi.som.yale.edu.
1845 Walnut Street, Suite 900 • Philadelphia PA 19103
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