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Directors Increasingly Tarnished Image: A New Solution

TK Kerstetter, CEO of Corporate Board Member, described how the image of Board of Directors have taken a real pounding in a recent blog . He participated in a number of conferences where he had the opportunity to interact with hundreds of directors. He wrote:

"I wish I could have conveyed to the world—or at least the mass media who seem to paint with one broad brush—how sincere the directors I have met are about doing a good job for their companies and shareholders. The majority of the directors in today's businesses had nothing to do with the financial crisis that sickened this country, but nevertheless they have felt the pain themselves and have suffered overall profession image attacks. To suggest that the directors I interacted with were greedy and didn't care about their personal reputation, as long as they "got theirs," would be doing them a terrible injustice."

I couldn't agree more. Perceptions of directors have taken a nosedive over the last few years and I agree with Kerstetter—the vast majority of directors are very serious and diligent about their responsibilities. It is hard to explain why such an overreaction has occurred within our society. It's as though there is a strong need for a scapegoat for our troubles and what better than the "Scrooge image" of business and the leaders who lead them.

Unfortunately, the image of business as something inherently evil probably goes back to the days of sweatshops, Scrooge-like bosses, the "robber Barons", and all the other tales that have filtered into the societal collective unconscious. And so when we as a collective suffer as we have, the likely culprit is the image of the greedy corporation and their leaders.

The reality though, is most business leaders, and directors are in fact concerned with doing well. They want to see their companies flourish and want to see their companies contribute to their customers. But even these well-intentioned people are caught in a paradigm. And more often than not, that worldview will dictate what behaviors and actions are and are-not possible.

Our existing paradigm where we view the organization as a means of production, a machine whose dominant purpose is to produce efficiently in the pursuit of maximizing shareholder value is at the root of why we find ourselves in this situation.

There is an alternative worldview emerging. I call it The Living Organization. It is a framework that casts the organization as a living entity that is born to fulfill a Soulful Purpose. A purpose that is by it very nature meant to contribute to the betterment of society through enhancing the lives of those it serves.

In this paradigm, the leaders are the custodians, the ones who nurture the development of The Living Organization so that it grows in its ability to contribute to the enhancement of its community of consumers, suppliers and employees. And in doing so, it creates value. When it creates real meaningful value, those who have supported it along the way, the investors and others will share in the increased value and profits. In this paradigm, all organizations become like every living individual, a creative citizen of our society.

Will there be some bad apples in the mix? Of course there will. Just as there are individuals who do not behave as good citizens, we will have some companies who as a collective are derelict in the role as citizen. But just as we do not condemn the whole of humanity for the wrongful behaviors of a few, we should not condemn the whole of business for the few who do not behave as good corporate citizens.

Maybe the answer to our challenges as directors is to go beyond the simple solutions and certainly beyond the attempts at legislating proper behavior, and move the conversation to the level of what do we stand for and how do we think about the organizations we lead.

Now that is a worthy project, though it will likely take a long-time. It will certainly shift the very conversation of what business is all about.



Norman Wolfe
Quantum Leaders, Inc.
Executing Strategy



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  • David King

    Many directors are "sincere" and "very serious and diligent".  These are necessary but not sufficient conditions of successful directorship.  Many of the directors who are sincere, serious and diligent are, nevertheless, doing a mediocre and inappropriate job.  There are a variety of reasons for this.

    First, many directors are recruited because of success in management, but the work of the director is not the work of an "uber manager", and very few corporations recruit directors with the following message:  "You have been very successful in 'X' executive position, and your reputation/success suggests that you can learn to do a very different job and do it well.  We want to have you as a director - a very different job from the one you have already succeeded at - and we want you to learn the very different job and do it well."

    Second, as the column suggests, a new paradigm is required.  Any new paradigm needs to understand the corporation in a new way, as Wolfe suggests.  A new paradigm also needs to understand the corporation's relationships and responsibilities differently.  Corporations can no longer be conceived as independent organisms passing through an environment:  they need to be understood as inter-dependent organisms embedded within an ecology.  The essential aspects of the new paradigm are role, relationships, and (re-)generation.

    Finally, I would say that directors, like unionists, are understood -- and reputed -- collectively, more than individually.  Collectively, directors need to accept responsibility for creating and promoting a new paradigm.  There are many directors who are comfortable within the existing paradigm.  There are not many who are insistently promoting a new paradigm.