Cockney or Count? Learning to Direct

One interesting and promising consequence of all the scrambling in recent years over corporate scandals and servile, inept boards, is the appearance of training programs, sometimes oddly called executive education, for directors (see here for a good summary of the topic from a piece in BusinessWeek.com).

The fact that most of these seem to be run by traditional business schools is potentially problematic, given the inwardly-referenced focus of so many such institutions, which drives them to regard conflicts between data and theory as invalidating the data. Nevertheless, the appearance of such initiatives is more likely than not to be a net good.

There seem to be two basic types of these programs. One teaches specific skills; in particular, numbers-crunching. Accounting and auditing courses for directors are designed to help them understand corporate financial reports sufficiently well to enable them to make relevant decisions, and also to spot potential problem areas, so they can start asking questions before things spin out of control.

The suggestion that someone who doesn’t understand financial reports could become a director, and then be given remedial education in basic skills, is reminiscent of problems with earlier stages of our educational system; perhaps they’re catching up with us. But the idea of giving a refresher, particularly from a forensic angle, may not be such a bad idea. We don’t want to make clerks out of our directors, nor do we want them badgering managers from the peanut gallery. But they don’t merely announce policy and retire to the board room, serene in their confidence that it will be responsibly carried out; they need to have current and skeptically-oriented monitoring skills.

Other programs take a more generalist approach, covering the nuts and bolts of work at the board level, emphasizing areas of key importance and current interest, such as top management compensation schemes and CEO selection.

In this group is a new entrant that specifically targets first-time directors. This is potentially a superior idea. Just as there is a substantive shift in thinking, planning, and executing that must take place as a manager crosses the threshold into the executive level, there is a possibly more challenging psychic gulf to be traversed when leaving the field of management altogether to move into the realm of strategy and policy. (One of the reasons that American corporate strategy is so poorly defined, understood, and executed is that it is performed by senior executives, who lack the fiduciary standing and operational perspective to do so, and is passed on by directors, who, largely, haven’t a clue as to what is their proper role in this regard.)

Accordingly, I think it would be most beneficial to see a two-fold system of director education programs appear. The first would be designed to help the new occupant of a directorship successfully negotiate that formidable border. The second would be a short two- or three-day platform for: 1) a review - and, perhaps, update - of particular skills necessary to be a good director, such as forensic accounting from the consumer angle; 2) an open discussion of current events and trends in the corporate environment and facing directors; and 3) a debate of some of these issues designed to draw out the various ways directors around the country view and address these matters; this would be designed specifically to help expose these ideas to a vigorous review in a non-operational setting, and to submit them to the market-place of an increasingly professional world of directorial practice.

Formal education for corporate directors: the traditional business schools have pulled one out of the hat. Hopefully, they will allow these programs to evolve based not on the research and theoretical interests of the professors, but on the feedback of their undoubtedly capable, observant, and operationally-involved students.