Wednesday, February 12, 2014

Lead, Follow, Get Out of the Way...Yes, You Board Director

In this day of more accountability on board directors, it's probably not appropriate for directors to follow, at least blindly, all the dictates of the company management. Charan et. al. in their latest book suggest that boards lead or get out of the way. And when to partner with operational leadership. Similar one of his earlier books, Charan defines the primary roles as being concerned with strategy, succession planning, the leadership 'gene pool', compensation of the CEO and monitoring financial health and risk management strategies. Boards shouldn't be involved in the day-to-day. Recently, a Harvard Business Review article touts similar progressive actions for the board.

In some boards, I've seen directors act more like advisers. If the by-laws didn't require a board of directors, there probably wouldn't be one. The directors did no directing. They agreed with management's proposals for CEO compensation without doing their own evaluation. They had no input into corporate strategy or risk management. They didn't worry about leadership development or succession planning. Worse, they didn't even evaluate their own performance: open, honest discussions; board composition and succession; relationship with the company leadership with regard to independence and collaboration. These are not good examples of 'getting out of the way.'

I've also seen boards where management is afraid of doing anything without board approval. There have been many times when board directors have had to push the operational and personnel decisions back to the executive team. At these times, the board is supposed to get out of the way.

If you're a board member, be clear about when you should be leading, partnering or getting out of the way.

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