The nature and role of directors | Managing Leadership

Managers in directors’ clothing

As we’ve seen during our recent discussion about corporate governance and capitalism, there appears to be an insurmountable disjunct between owners and managers in the administration of publicly-held companies (characterized by anonymous shareholder-ownership) with respect to communication of strategic identity and intent. One would think that the obvious role of the board is to try to close this gap.

But no. That selfsame interruption of strategic communication has been seized upon by management to create what some now call the very cornerstone of American capitalism: a corporation in which the CEO reigns, more or less literally, supreme and the board plays a complementary, supplementary, or merely a supporting role. As for shareholders - well, no one really even talks with them, just with security firm analysts.

Moreover, in the current atmosphere of increased attention to the board’s role, it shouldn’t be surprising to see the sorts of after-the-fact descriptions so often offered of what that “truly” is. These typically are one version or another of what management has always insisted to be the case, anyway. It is worth bearing in mind that for decades management, having taken - silently and with essentially no resistance - the high ground in the corporate governance terrain, has also coopted most of the rest of the actors in the field, from consultants to academics, and even, for the most part, regulators.

Some people argue that the board’s sole role is to pick the CEO, others that it is to provide expert advice, and still others that whatever it is, it is most definitely not to irritate the CEO by poking into management business. In such an environment, what sorts of directors should we expect to find on boards? And as attention to this issue grows, what, if any changes, might we see among them?

We will be looking at that over the next few days. In so doing, we will review some history, take some stands of our own, and make - or, rather, elaborate on some older - proposals. Please do join in with your own ideas - or comments and considered criticisms of those presented here.

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This post is a part of a series. You can learn about and link to the other articles here: Directors and managers

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Today’s tip: Friday we posted a review of a book that is critical of the presumption that academic programs can alone produce ready-to-go managers. One of the most powerful minds in management theory, woefully under-appreciated in the US, just published an essay of his own thinking on this topic in the current edition of BusinessWeek. Please stop over to see this piece - which includes a discussion of the potential of on-line education, also noted in the tip section of Friday’s post - by the Irish management thinker, Charles Handy.

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