Thanksgiving is America’s secular holiday that offers us the opportunity to reflect on what matters most in our lives. For 30 years Caro and I have hosted about three dozen family and friends, but because of COVID-19, this year’s celebration was unlike any other. We had 17 of our immediate family seated 6 feet apart, outside in a heated tent overarching our outdoor patio. But some things remained the same. We gave thanks for the safety, health and happiness of our family and friends, and we were grateful to have three generations of Rocks at our home.
Each year I have offered some remarks before our Thanksgiving dinner. This year I focused on the importance of friendship. Friendship has been praised in poetry, revered in literature, extolled in art, heralded in movies and trumpeted in song. In contrast to many other close relationships, friendship is completely voluntary. Whereas relatives are designated by blood, neighbors by proximity and colleagues by work, friends are chosen for mutual interests, activities and beliefs.
My Thanksgiving theme raises questions for boards of directors. In particular, should directors be friends with the CEO? With their fellow directors? In times of unprecedented challenges, how important are friendships among board members?
Forty years ago, when I first began joining boards, many of the directors knew one another based on their common backgrounds such as college ties, common pastimes such as golf and common interests such as civic activities. These commonalities led to friendships, which carried over to the boardroom. The chairman, who was often the CEO as well, chose directors from his circle of friends.
Those days are well behind us. Existing friendship is now seen as a disqualifier for board membership, particularly in public companies. Directors must be independent, objective and non-conflicted. Thus, governance committees, along with their search firms, usually eliminate current friends of the chair/CEO from consideration for a board seat.
Yet there is need for a degree of friendship both among the directors and with the CEO. They need to work together collegially and collaboratively. Good directors, like good friends, speak freely and candidly, telling you what you need to hear, not just what you want to hear. Good directors ask tough questions and they don’t just “go along to get along.”
The hallmark of friendship, namely mutual trust and respect, is the foundation for good corporate governance. Friendships take time to develop and board dinners, retreats and outings can help accelerate their formation among the directors.
The test of a board, like the test of friendship, arises during times of difficulty, adversity or trouble. These challenges often necessitate sharing a foxhole and a board comprising directors with shared interests and experiences is better able to go into battle. The lockdown imposed by COVID-19 has presented such a challenge. Making do with virtual meetings via lengthy telephone conversations and ubiquitous video calls, boards are relying on their bonds of friendship to sustain the smooth functioning of their decision making.
Upon request, I have emailed my Thanksgiving remarks to a growing audience, which includes those boards on which I serve. To my fellow directors, I wish you safety and health, and I want you to know how much I value your friendship.