Many books address operations, customer service, and how employees should work together. Yet there is a significant activity that does not get a fair share of print – or with e-books these days, a fair share of pixel. Selecting highly educated professionals to be board members.
Many organizations flounder because board members are selected from ego rather than practicality with respect to the organization. Others flourish from selected board members whose participation improves the value of organizational resources.
How Does an Organization Make the Best Choice?
One book that reveals the right wisdom to the board selection process is Boards That Lead: When to Take Charge, When to Partner, and When to Stay Out of the Way.
The book was written by three of the foremost business leaders today. I am most familiar with Ram Charan, author of Execution and other business books. He joins experts Dennis Carey and Michael Useem in outlining the significant processes that make an effective corporate board.
Boards That Lead is divided into three sections. The first delves into establishing functional boards, thus the title Boards That Lead. The second, Leading the Leaders, examines how boards work with an executive team. The last section, Value Creation, identifies the activities that create the most utility for an organization’s benefit.
The book material is designed to permit readers to imagine multiple combinations of direct and collaborative leadership. Increased enterprise complexity calls for these varying degrees of oversight. A summary image shown below captures the aspects of how a board leads, partners, monitors, and delegates:
Each chapter examines these aspects with a “director’s checklist” to ask critical questions within your own context. For example, one chapter asks you to know the purpose for why your organization exists. Recruiting a director? Eight questions ask what makes a good fit.
The specifics in Boards That Lead offer compelling views of the complexity of being a board member. There are great perspectives for new board members, such as the litigation that has arisen over board obligation:
“….Investor demands for more independent boards that would be accountable to them, paid like them, and fiduciaries for them gave rise to litigation….the legal actions did help establish two standards for director obligation: Duty of care, requiring directors to exercise reasonable caution in executing board responsibilities that could harm others if not performed well, and duty of loyalty, requiring that directors exercise good fiduciary judgment on behalf of the stockholders.”
Overall, Boards That Lead examines how the boards can take charge, partner, and prevent micromanagement by examining the typical tasks. While reviewing the text, I got a good impression that the authors really worked at striking a balance between honoring their real-life experiences and providing examples that reasonably acknowledges their counterpoints as much as their advocated points.
For example, that previous quote follows the famous example of bringing Steve Jobs back to revive Apple. The authors detailed Jobs’ requests with Woolard, a director who noted that partnering with the right CEO was important. Yet the authors also periodically note how a board can be to blame for a company’s failure:
“When (Ram Charan) subsequently taught a business case on Apple, executive program participants almost always blamed the firm’s decline on poor leadership in the corner office. But on our view, it was the board that had recurrently selected the wrong CEOs for the office – in effect, the chief executives were dead on arrival. A solid pedigree from past performance had made them attractive managers, but their skill set proved a poor match for the triage they actually had to perform.”
The authors delve into other examples of well-run and challenged boards including publicly-traded companies such as Lenovo, Delphi, and Infosys. In each example, the authors show the results from responsibilities that can be taken by boards as well as the one best left to executive management.
Further reading is possible with the text, with a detailed appendix. Furthermore, I can see Boards That Lead being an aid for experienced start ups looking to add board oversight to their activities. Combine this with a book on venture capital such as David Capstone’s Venture Capital Investing which I reviewed a few years ago.
Read Boards That Lead before considering a board for your organization. Doing so can establish the most resourceful leadership for your organization.
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Source: Small Business Trends
“Boards That Lead” Identifies When to Partner, Take Charge, or Get Out of the Way