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| Best Practices |
Constructive Contention
Suzanne McGee
06/01/2004
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Those of us contemplating
joining a board as part of the rush to find more independent members should bear
in mind that responsibility now goes well beyond showing up with a PDA stuffed
with contacts that might be useful to company marketing and finance executives.
As directors, we are now accepting an unprecedented amount of personal
liability; ergo anyone with an invitation for a board seat must perform as much
due diligence on the board as the present members will do on the candidates,
investigating not only the company’s fundamentals but also whether mechanisms
are in place that allow for constructive disagreement. The exploration is a
soul- TOP VIEW
In the wake of scandals that tarnished the directors of Enron, Tyco, WorldCom
and others, corporate board members cannot afford to rubber stamp senior
management’s decisions. Our economic survival and professional reputations
dictate that boards not merely tolerate but encourage anyone with a contrarian’s
view to explain his objections and cast a nay vote. |
searching process in which we must ask ourselves whether we would be
willing to follow the lead of directors like Roy Disney or Walter Hewlett of
Hewlett Packard & Co., taking a public stand against a company strategy that
the rest of the board supports.
Avoiding the Noose
“Directors are aware, at least in theory, that
keeping their mouths shut when management is proposing a course of action worth
hundreds of millions of dollars to the company is very risky, to them personally
as well as to the company,” says Jay Lorsch, a professor at Harvard Business
School and co-author of Back to the Drawing Board (Harvard Business School
Press), a recently published book on boardroom best practices. Lorsch himself
currently serves on the boards of Blasland, Bouck & Lee, Computer Associates
International and InteCap. “Any time a scandal hits the headlines, directors
start asking themselves what they need to do to avoid putting their own heads
through the same kind of noose,” he says.
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