Managing Leadership^®

The rise of assertive boards and shareholders is a recent phenomenon in the United States, provoked by spectacular instances of executive malfeasance so egregious and damaging that they could not be ignored. But this resurgence of the struggle for power between boards and managers comes after a long period during which management was fully in control. Indeed, its victory was so complete that it was virtually institutionalized; the only remaining controversy was how boards could better enhance and defend the power of the CEO, and facilitate his or her expression of it. Why was this so?

The cult of the individual leader extends into virtually every facet of our modern lives from roots buried deep in our culture. Our religious, military, and political histories all revolve profoundly around the actions of singular personages who sought to direct the flow of our futures down one course or another. This path was determined wholly by them, with the inherited or usurped authority of the state behind them, and, perhaps, with divine inspiration informing their efforts. Alexander, Caesar, Napoleon - never mind the examples from the past 100 years - all of our putative leaders have operated, almost always with our acquiesance, if not with our wholehearted support, by this model.

Our modern business leaders have done the same. From the industrial tycoons of the 19th century to those of today, they have worked according to the model of the great, authoritarian individual leader who answers to no one but his or her own unfathomable (to us mere mortals) genius, and whose presumed wisdom and judgement must be respected and enthusiastically supported. Indeed, one prominent management guru goes so far as to argue that organizations should be designed and managed in such a way as to most effectively cause them to give direct and undiluted expression to the “inspired musings” of the leader. Such pap actually attracts widespread support from management consultants and managers (unsurprisingly), but (more surprisingly and disappointingly) from boards, as well.

But this is changing. The Sarbanes-Oxley Act, ambitious prosecutors, predatory litigators, and powerful shareholders are beginning to reawaken previously somnolent boards, infusing them with purpose and power, and restraining the hitherto boundless freedom of action of management. This would appear, at first glance, to be a long-overdue positive development. But might it not go too far? We will look at that question next.

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You may want to see all the posts in this series:

1. Taking control of the CEO
2. The CEO: too hot
3. The CEO: too cold
4. The CEO: just right

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