Get the world off your shoulders
From 7 Lessons for Leading in Crisis by Bill George. Copyright 2009 by the author. Published by Jossey-Bass, a Wiley imprint (www.josseybass.com).
Do you ever feel like Atlas — that you're carrying the weight of the world on your shoulders? That the whole organization is depending upon you and you're not sure you can pull it off? And if you don't, everything you have built for years will collapse overnight?
I've had that precise feeling many times in my career, especially as CEO of Medtronic. Frequently I felt that resolving serious problems depended on my ability to lead the organization. If I made the wrong judgment, I feared the whole place might come tumbling down, and I would be responsible for the company's demise. No doubt my free-floating anxieties were overstated, but most of us have a fear-of-failure narrative going through our minds, along with our striving-for-success narrative.
When I felt like that, I knew it was time to step back, take a deep breath, and recognize that I was not in this situation alone. It was time to get the world off of my shoulders and ask others for help. This meant turning to my teammates within the organization and people in my personal world who support me.
Bill George is professor of management practice at the Harvard Business School and former chairman and CEO of Medtronic Inc. He is the author of the best-selling books True North, Finding Your True North, and Authentic Leadership (www.billgeorge.org).
What makes the primary difference?
From Boardroom Realities, edited by Jay Conger. Copyright 2009 by John Wiley & Sons Inc. Published by Jossey-Bass, a Wiley imprint (www.josseybass.com).
What my colleagues in this book and I have learned is that simply having the “right” governance practices on your board is only a first step — at best. We actually know from research that there is little or no relationship between the presence or absence of most board governance practices and the performance of your organization. After all, Enron won acclaim for its many “best practice” boardroom governance structures.
Boardroom leadership and character make the primary difference in the performance of a board — not a set of governance practices. In other words, effective boards are more often the product of a leadership capacity shared across the board and a culture that encourages candid dialogue and inquiry. They are the combination of a CEO who earnestly shares his or her power with the board and directors who are able to lead in the unique setting of a boardroom.
Effective boards possess a high-caliber directorate whose members are proactive, inquisitive, and highly responsible leaders. They operate as a team despite conditions that are not ideal for teamwork. The skills and backgrounds of directors complement one another powerfully and match the unique needs of the business. These are boards for which best practices are not window dressing but rather processes that enable an already empowered and informed directorship to act as both an outstanding source of counsel and a vigilant monitor. They are boards that advise their CEOs but also stretch them.
Jay Conger holds the Kravis Research Chair in Leadership Studies at Claremont McKenna College. He co-authored Corporate Boards: New Strategies for Adding Value at the Top and has written a dozen other books on leadership.
A director's blurry line
From The Road to Financial Reformation by Henry Kaufman. Copyright 2009 by the author. Published by John Wiley & Sons Inc. (www.wiley.com).
Good governance in financial institutions — or in any organization, for that matter — begins at the top, with the integrity and skills of the leaders. Easy as this may sound, it is extremely difficult to attain within large institutions. Whatever a particular leader's skills may be, large financial institutions, typically, are involved in many activities — foreign exchange, investment banking, trading of securities, proprietary position taking, insurance, money management, among others. Senior management therefore must depend on middle management for a flow of accurate information.
Corporate directors face an especially demanding challenge. Each day they must confront the difficult question: How informed should board members be about all the activities and policies of the institutions they serve? In this realm, the line between policy and operations often is blurry. How much should a board member know about transactions with affiliated companies, about the transfer of assets to affiliated entities, or about off-balance-sheet activities?
My own experience suggests that the information quandaries that confront board members can be alleviated in a number of ways. First, new board members should undergo an intensive orientation program. Second, board members need to meet more often — and more intensively — with middle managers, not to discuss operational matters, but rather to reach a common understanding about policy issues. Third, new directors should be required to meet with members of official supervisory agencies such as the Federal Reserve, the Comptroller of the Currency, and the Securities and Exchange Commission, all of whom should explain what these agencies require from the institution and what is required of them as directors. Fourth, new directors should meet with the independent legal counsel who represents them to learn their responsibilities and liabilities from a legal perspective. Fifth, outside auditors should brief new directors on the firm's accounting practices, especially those that fall within contentious gray areas.
Henry Kaufman has been president of Henry Kaufman & Company Inc., an investment management and economic and financial consulting firm, since 1988. He previously spent 26 years with Salomon Brothers Inc.
A deer in the headlights
From Stick Out Your Balance Sheet and Cough by Gary W. Patterson. Copyright 2009 by the author. Published by FiscalClinic Communications, a division of Fiscal Doctor Inc. (www.fiscaldoctor.com).
Although progress has been made to guard against governance scandals, too many board members today are in the dark —sometimes even completely clueless — when it comes to knowing the fundamental facts (read: financial health and profile) of the companies on whose boards they sit.
I'm continually amazed by what board members don't know that will indeed embarrass them if pressed against the wall. My perspective is a twist on the adage, but I believe if you can't see the trees for the forest, you're overlooking fundamental, if not critical, knowledge of your company's business. While the questions below may sound rudimentary — if not rhetorical — depending on your answers, you may be a deer in the headlights just waiting for impact, or at least blushing with embarrassment over poor boardroom performance. You be the judge.
• What is your gut reaction to where the company stands?
• Do you really know the direction in which the company is headed?
• Are you receiving the communication package in a timely manner?
• What is the quality of the communication material you receive?
• Are the financial figures and operational metrics accurate?
• Do you know who your most profitable customers are?
• Is your expertise being utilized to its fullest?
Gary Patterson is The Fiscal Doctor®, a consultant with 30 years of experience in working with CEOs, board members, executive teams, PE investors, and entrepreneurs to help them identify and manage risk factors in their businesses.
Authority and intimacy in the boardroom
From Nonprofit Governance by John Tropman and Thomas J. Harvey. Copyright 2009 by the authors. Co-published by Corby Books and University of Scranton Press (www.corbypublishing.com).
This practical book will repeat, over and over again in different contexts, that the power of the board to act and lead is not found in individuals nor in individual responsibility, but in the social interaction of the group. Thus, if directors search for theories that can assure the best organizational behaviors and successful outcomes, they would be well served in reviewing the basic dynamics of group process.
Throughout this text, there runs an underlying assumption that the most successful boards function well as a “group.” Group theorists hold that any group must deal effectively with two challenging problems if it is to function well. They are the problem of authority and the problem of intimacy.
The authority problem has little to do with hierarchical authority. Rather, group theory uses “authority” as a designation of rights or powers by the members of the group to each other. The intimacy problem does not refer to romantic intimacy. It merely tests whether members of a group accept and like each other enough to work together after the authority problem has been resolved.
John Tropman is a professor in the School of Social Work at the University of Michigan and the school's acting dean. Thomas J. Harvey is director of the master of nonprofit administration program in the Mendoza College of Business at the University of Notre Dame.
Fundraising as a performing art
From Yours for the Asking by Reynold Levy. Copyright 2008 by the author. Published by John Wiley & Sons Inc. (www.wiley.com).
How many activities in life are as unpopular as fundraising? There's something very intimidating about approaching a friend or a relative stranger and requesting a gift. It's widely viewed as a bold and presumptuous act, one filled with the potential for awkwardness, embarrassment, disappointment, and rejection.
Chief executives of hospitals, universities, and cultural institutions often cite raising money as the least pleasant and most trying of their responsibilities. Many trustees, when faced with the choice, would prefer to donate more than they would otherwise rather than solicit others.
The average length of stay of the presidents of large nonprofits in almost any field is now some seven years. An important reason for such relatively short terms of service is carrying the burden of the relentless pursuit of charitable gifts, 24/7.
In its broadest sense, raising funds is a business skill of the highest order. It is precisely what private equity and hedge managers do everyday to attract capital for their acquisitions and investments. It's what allows hospitals and institutions of higher education to convince the tax-exempt bond market to support their physical expansion or modernization. And it's an attribute every chief executive of every nonprofit institution needs to possess.
Put simply, fundraising is nothing more than salesmanship. It's persuasiveness at work. It's a performing art.
Reynold Levy has been president of Lincoln Center for the Performing Arts since 2002.