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Hurricane Governance II

In chapter five of Authentic Leadership, Bill George outlines how authentic companies approach organizational values:

In chapter five of Authentic Leadership, Bill George outlines how authentic companies approach organizational values:

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  • Values begin with telling the truth, internally and externally.
  • Authentic companies value the importance of stewardship to the people they serve.
  • Authentic companies operate in a democratic and collaborative manner.
  • The final value of the authentic company is consistency.

One area in which even the best of companies can be inconsistent is brought up in chapter 15, George’s chapter on governance: “The difference between healthy, productive boards and those that fail to exercise good governance lies in the chemistry between the board and the CEO.” (pp. 166-167)

George goes on to offer a Blueprint for Improved Governance, one of the more important passages in the book. Among his guidelines:

  • Governance Principles Independent directors of the board should delineate the board’s resonsibilities to provide procedures for conducting board business.
  • Governance Committee A governance committee should be chaired by an independent director. If a single person holds the position of board chair and CEO, the chair of this committee becomes the presiding director of the board.
  • Composition of the Board The committee should regularly assess the makeup of the board and the type of new directors needed to assure a diverse set of opinions.
  • Executive Sessions It is imperative that the governance committee meets regularly in executive session without the CEO present to ensure the candor of its discussions.
  • Assessing Performance The independent directors should address the CEO’s performance annually, using a written evaluation form complete with individual comments.
  • Functioning of the Board Board meetings themselves must provide adequate time for in-depth discussions of strategies and investments, the risks inherent in them, and the accounting treatments being used.

Deposed NYSE CEO Richard Grasso and the remaining board members might be particularly interested in one specific sentence in this section: “All too often the complacency of the independent directors results in letting CEOs effectively choose new board members as well as their own successors.”

Now that an interim director is in place, more attention will surely be paid to the board.