September 16 – At the Global Boards Forum, presented today in New York City by Directorship and Global Proxy Watch, 80 directors of public companies gathered to discuss board member responsibilities.
Particularly striking to me were the similarities between my experiences with nonprofit boards and the compelling statements made by stand-out speakers Rita Foley, Director, Dresser-Rand & PetSmart; Marilyn Carlson Nelson, Chairman & CEO, Carlson Companies, Director, Exxon Mobil; and William George, Professor, Management Practice, Harvard Business School, Former Chairman & CEO, Medtronic, Director Exxon Mobil, Goldman Sachs & Novartis.
Key themes regarding for-profit boards that particularly resonated, especially in light of this week’s business news:
- Leadership is key. Not only do corporations require outstanding CEOs but boards need to identify the board leader.
- Boards must step up and take responsibility. As stewards, boards are responsible for the preservation and growth of the enterprise. They determine the future, and they will be judged by the legacy they leave.
- Leadership succession planning is essential. It is incumbent on boards to ensure that leaders are being developed from within the company for the future.
- Boards should be comprised of directors with diverse perspectives and expertise in order to ensure rich discussions and the long-term view that is necessary for success.
- Boards need to take the time to learn and understand the business, visit and meet at global sites, get to know senior management, and engage in strategy discussions, while also understanding the line between governance and management, and discussing where that line is.
- Values and ethics matter. Credibility matters. As we know from reading headlines, when you lose the public trust, your organization is worthless.
While compliance with the Sarbanes Oxley Act of 2002 is unquestionably a must, I appreciated Bill George’s caution that you can comply with Sarbanes Oxley 100% and still go bankrupt tomorrow. In the nonprofit sector, there is often a fixation on checklists of board practices that do little or nothing to advance the organization; actually, cumbersome checklists can distract attention from productive strategic and revenue work.
Whether they are for-profits or nonprofits, the organizations that will thrive – especially in a tough economy – will be the ones that are governed by boards who
- understand markets…what’s compelling, innovative, and useful to customers, clients, and payors,
- imagine the greater potential,
- create the revenue models and streams that are necessary to accomplish success,
- build networks, relationships, and partnerships that are needed for success, and
- serve communities to achieve greater peace and prosperity for all people in the long-term. (yes, that includes education, jobs, healthcare, robust economies throughout the world, and a sustainable environment)
Boards have both a responsibility and an opportunity to create the future. As Marilyn Carlson Nelson said today, boards create the legacy we will leave to our children and grandchildren.