news.com carried an article yesterday from a management magazine that claims not only are businesses failing to implement meaningful reform, the measures they are taking may actually be counterproductive. The magazine says corporate boards are implementing only the reforms that have glitz, valuing appearance of change rather than actual reform.Duh. Big business will only institute the number and depth of reforms which they are forced to do, whether by legal or public pressure. So far, the latter hasn't been enough. And the demand and outrage fade, especially as war occupies headlines. Meanwhile, business continues as usual. In fact, a surprisingly large number of company directors have little or no background in the businesses they are monitoring. As one Australian executive director we interviewed put it, "Most of our directors have little or no real understanding of our various businesses." Today, not all directors can even work their way through financial statements. One CEO recently asked Professor Epstein to join his board because the chief needed help figuring out his own financial statements. If the CEO isn't fully financially literate, Epstein wondered, how can the directors be expected to be? He declined the invitation. Arrogance is apparently not limited to board members and executives, however.The layman's currently jaundiced view of corporate governance--defensive CEO packs board with cronies and weaklings, then manages the information they get so they can't do him harm, in the process so enfeebling the board that they can never add value--is leading many to propose a more "modern" governance model: Enlightened, open CEO enlists extremely talented, opinionated, and strong-willed board members, gives them free access to whatever information they need, and then uses them as a strategic forum for formulating strategy, answering really difficult questions. Obviously, then, it's the "layman's" fault for having a jaundiced view. What a patronizing remark. As if the common folk can't possibly understand the complexities of board business.Such as judging conflicts of interest, or executive compensation packages, or...
8:59:39 AM 
|
|
