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Checklist for dealing with nonperforming directors
Redirecting, deselecting, or not recruiting troublesome directors in the first place have become far more important tasks for the board.
By Ram Charan, Dennis Carey, and Michael Useem, authors of “Boards That Lead”
Almost all directors look promising before they enter the boardroom, but not all perform equally well once inside. In our experience, as many as half of Fortune 500 companies have one or two dysfunctional directors. Not infrequently, an intimidated management ends up kowtowing, fine-tuning its presentations in the boardroom to anticipate the difficult director’s reactions or consulting with the director in time-consuming ways accorded to no others. It becomes a drain for everyone involved — except the dysfunctional director. Let us be clear. We are not critical of directors who disagree with management strategy or voice alternative directions. We are not even talking about hostile directors sometimes forced onto the board by a hedge fund trying to take control of a company or about partisan factions that have formed for whatever reason.
Pictured in photo, left to right: Dennis Carey, Ram Charan and Michael Useem
Dysfunctional directors have their own modus operandi. Some see themselves as the smartest person in the room, others seek recognition, and still others are frustrated would-be CEOs.
Into Dark Alleys
Whatever their personal motives, they tend to micromanage or take boardroom discussions down dark alleys. We have seen a director interrupt the first five minutes of a CEO’s boardroom presentation and sour the mood of both board and management for the remainder of the day.
The result is to impair, even negate, a board’s capacity to lead the firm. As in any group, a dysfunctional member can sabotage the entire team.
In the Current Issue:
Fourth Quarter 2014
The Next Major Risk Management Challenge
It’s secure enterprise mobility, warns BlackBerry Chairman and CEO John Chen.
Succeeding at Succession: Do This, Don’t Do That
So many boards blow it on CEO succession. Here is what they can do to improve their track record.
The Board’s ‘Seven Year Itch’
It would benefit all to have directors take a one-year sabbatical.
In This Month's e-Briefing:
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Gen. Georges Doriot's Holiday Party Advice
When festive occasions are in full swing and spirits are flowing freely, take heed of the General's counsel.
By Jim Kristie
If there is one inquiry that I get asked the most, it is for advice on getting on a board. It was that way again this year, which is why this topic gets addressed regularly in Directors & Boards.
And in the e-Briefings. This month you will find that both the Article of the Month and the Columnist pieces are full of insights and guidance for those looking to join a board.
Seeing as this is the final e-Briefing for 2014, I am going to close out the year on a note with a holiday touch—but one with a key pointer, especially in this age of social media.
In October I ran into a favorite author, Barbara Hackman Franklin, at the dinner in which the Economic Club of New York presented its Special Achievement Award to Peter G. Peterson. (You can read more about the award here—a write-up I did that appears in the Fourth Quarter 2014 edition of Directors & Boards. And on the subject of awards, see the News page in this month’s e-Briefing for the item about Barbara being named to its Hall of Fame by the National Association of Corporate Directors.)
I don’t know how we got on the topic at the Peterson event but we both had a chuckle recalling a famed Harvard Business School professor, Gen. Georges Doriot. Here is a story Barbara told me about the General for the “Oral History of Corporate Governance”-themed special 25th anniversary issue of Directors & Boards published in 2001:
"I still find it amusing today to remember that a course taught by one of the most esteemed members of the faculty, Gen. Georges Doriot, was closed to women. We were warned by our counseling professors not to try to sign up for that course because he didn’t take women. When I ran into him many years later, I told him I had wanted to take his course, and what did he think about not allowing women in his class. He looked right at me and said, ‘I’m damn proud of that!’”
Barbara was a good sport and laughed about it then and at the October dinner, but I am sure it was not a laughing matter at the time. As one of the first women to graduate from Harvard Business School (which she did in 1964), she and other high-achieving women missed out on taking a class with this renowned professor. As the New York Times stated in its obituary when the General—as he was universally called because he had been a brigadier general in the U.S. Army during World War II—died in 1987, "for four decades [he] was widely credited with inspiring and training more leaders of American corporations than any other person."
Spencer Ante, author of the book “Creative Capital: Georges Doriot and the Birth of Venture Capital,” once listed in his “Creative Capital” blog the “Top 10 Aphorisms of Georges Doriot.” It is a marvelous set of observations.
One in particular is quite applicable at this time of year — the Christmas and New Year’s holiday season, when parties and festive occasions are in full swing and wine and spirits are flowing freely. Take heed of the General's counsel:
“Never have more than two cocktails on any occasion. If any information is to be exchanged over whiskey, let us get it rather than give it.”
That sounds like prudent behavior for board members and executives. Especially so in an age when social media makes it so easy for stray comments to find their way into the wrong audiences and wreck mayhem.
So on this note of party etiquette from the General, we will close out the e-Briefings for 2014, and wish all our readers a joy-filled holiday season. Be sure to come back and read us in January.
As always, I welcome your comments at firstname.lastname@example.org.
is the editor and associate publisher of
Directors & Boards.
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Events of Interest to Directors
December 4-5, 2014
KPMG’s 24th Annual Accounting and Financial Reporting Symposium provides corporate executives with the latest insights, thought leadership and newest information on critical issues and developments affecting financial decision making, including year-end reporting activities. Pulitzer Prize-winning journalist Bob Woodward will serve as a keynote speaker for this CPE-eligible program. Sessions will include implementing the new revenue recognition standard, current FASB developments, accounting for leases and financial instruments, as well as sessions on managing risk, COSO, an SEC update, and a Washington outlook. The program will be held at the Venetian Hotel in Las Vegas.
Visit KPMG’s Symposium website to learn more and to register.
December 18, 2014
See all events.
Yale CEO Leadership Summit will be held at the Waldorf-Astoria Hotel in
New York. Under the direction of Prof. Jeffrey Sonnenfeld, senior
associate dean of executive programs at Yale School of Management and
founder, president and CEO of The Yale Chief Executive Leadership
Institute, the program brings together prominent CEOs and other
business and market leaders for highly interactive peer-driven
educational discussions. This session's theme is "The Global CEO and
Local Sensitivities: Leading at Once as Diplomat, Patriot,
Entrepreneur, Financier, and Indistrialist." For more information,
email Joe DeLillo at
1845 Walnut Street, Suite 900 • Philadelphia PA 19103
Tel: (800) 637-4464 or (215) 567-3200
Fax: (215) 405-6078
Editorial: James Kristie (215) 405-6081
Publishing Director: David Shaw (301) 963-6162
Advertising Director: Scott Chase (301) 879-1613
Subscriptions: Barbara Wenger (215) 405-6072
Reprints/List Rentals: Jerri Smith (215) 405-6071