Thursday, May 01, 2008
A Great Board of Directors
A recent article on Business Week's website discusses how a firm can create an excellent board of directors. The article makes a key point, namely that while a board can meet all of the structural requirements advocated by governance experts, that does not mean it is an effective board. In other words, one can have the correct percentage of outsiders, a nonexecutive chairman, and the like, and yet still not provide effective goverance. I have always believed that far too much attention is paid to structural dimensions of the board, and far too little attention is paid to process. Great boards of directors have highly effective group processes for dialogue and deliberation. Their process distinguishes them from less effective boards, not their structural characteristics.