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To Have and To Hold
Be thankful for your strong directors, who were needed more than ever this past year.



For my first e-Briefing editor’s note of 2009, I predicted back in January that the year ahead for boards would be Byrom-esque. That was a pretty good call.

Byrom-esque was a term I adapted from an inimitable saying by a corporate statesman named Fletcher Byrom. Fletch ran Koppers Co., a Pittsburgh-based engineering and construction conglomerate, for two decades during the 1960s and ’70s. One of his classic theories of management was this: “The best motivated person is a 5-foot 10-inch nonswimmer in 6 feet of water.”

Eleven months ago I sensed that the crisis of credit, markets, leadership, and confidence that the country was experiencing would make directors feel like they were Byrom’s splashing-like-mad nonswimmers.

Think how many directors may have felt that way two months later, when the stock markets hit their debilitating lows in March. Or felt that way every time Congress turned its jaundiced eye to the corporate sector, pondering new regs — or, new mischief — that it could unleash. Or when the activists arrived, stumping for say on pay and proxy access. Or as directors realized how much they didn’t know about the risks inherent in the businesses they oversaw. Or couldn’t come up with needed financing. Or on and on.

Many board members did slip below the surface, never making it through the year. We saw that at Bank of America, Citigroup, AIG, GM, and other troubled entities.

But Fletch’s saying had its positive upside. “If you’re doing as well as you should,” he believed, “everyone’s head ought to be a little bit under water all the time. People perform best under conditions of moderate tension.”

I’d say that 2009 was a time of more than moderate tension. But whatever the degree of intensity of this year’s testing of the strength and integrity of the corporate governance system, one thing was clear: good directors were vital to have and to hold onto. If you’re still standing, and you are looking to 2010 with some optimism, then as a CEO or director you are probably feeling thankful as we head into the year-end holiday season. You kept yourself and your enterprise bobbing above the Byrom waterline. That’s a testament to your leadership and governing abilities.

Sadly, Fletch himself never made it through the year. This grand business leader of the old school — a CEO who led a major industrial corporation, served as a powerful presence on the boards of several Fortune 500 companies, moved comfortably between the business world and service to government, science, academia, and philanthropy, and operated as an all-around strategic adviser on the world stage — died in July at the age of 91.

If you would like a copy of his article that I published a while back, a beautifully written and observed nine-page set of reflections on leadership titled “A Message to My Successor,” email me at jkristie@directorsandboards.com and I’ll pass it along.

And as treacherous as this year has been on sitting directors, there are plenty of accomplished individuals who are prepping themselves for the opportunity to serve.

I was astonished at the response to my offer in last month’s e-Briefing for a complimentary copy of “How to Get on a Board,” a primer full of great advice that we published in Directors & Boards. If you didn’t get your copy last month, the offer still stands. We need good people to step up to the demands of directorship, so I’m happy to share this article with all who are interested in jumping into the pool, even though that pool’s depth may be a couple of inches above your head.

Thank you for your readership this year of the e-Briefings. We look forward to your colleagueship in 2010.

And as you head into the holidays, just as I started this year with a memorable aphorism, let me close out the year with one. This one comes from famed Harvard professor Gen. Georges Doriot (courtesy of the “Creative Capital” blog): “Never have more than two cocktails on any occasion — if any information is to be exchanged over whiskey, let us get it rather than give it.”

Jim Kristie is the editor and associate publisher of  Directors & Boards.

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Special Note:  On January 20, at 2pm EST, I will be moderating a special Directors & Boards Webinar on the topic of  "Enterprise Reinvention:  How Directors Can Elevate and Sustain Corporate Performance Through Enterprise Risk Management."   My speakers will be Jack Bergstrand, the author of Reinvent Your Enterprise, and the founder of Brand Velocity, Inc., and John A. Wheeler, the managing principal of Weelhouse Advisors LLC, and the former senior vice president and senior risk offier  within the corporate risk management division of SunTrust banks, Inc.   This webinar will provide an exploration—from an enterprise perspective—on how to transcend outdated “siloed” management approaches and become more systematic in the rapidly changing global environment.   To register for this free webinar, click here:  http://www.visualwebcaster.com/event.asp?id=64478

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Editor's note:  Each month, we ask a Directors & Boards reader to comment on critical issues facing directors today.  If you'd like to participate in this section in the future, please email Scott Chase. 

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• Receivables and credit risk impact cash flow for nearly any business.
• The credit quality of customers and suppliers--something the survey respondents cannot directly control--has been affected significantly by the recent recession.
• It is not easy to replace customers and suppliers.

• Most companies have been hard hit by the recession, and nearly a quarter (23%) report a revenue shortfall of more than 20%.
• Although 30% of executives said the recession would end in 2009, 53% noted they believe it will end in 2010.
• Changes to short-term operating budgets and cash management have been greater than were anticipated a year ago.  Sixty percent said they made changes to short-term operating budgets, while only 44% said they were planning on them a year ago.  Further, 57% changed their cash management practices; 49% said last year that the change was in the offing.
• When it comes to specific areas of risk management most in need of improvement at their respective firms, 22% cited operational risk, and 16% indicated market risk, while 14% said liquidity risk.

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• Real-time examples where boards do not have a CEO successor in place, such as Bank of America’s surprise announcement of Ken Lewis resigning.
• Increased government business regulation—such as the October 27 SEC legal bulletin, No. 14E on Shareholder Proposals that makes companies include shareholder proposals that focus on CEO succession planning.
• Turbulent business environment calling for greater risk management.