The credit crisis and subsequent recession has thrown many financial and business institutions into, if not chaos, then at least a sense that the landscape underneath has shifted significantly. One institution undergoing such self-review is the corporate board of directors.
So it’s more than timely that a book on the subject by one of the world’s great experts on corporate governance, Harvard Business School Professor Jay Lorsch, will be published in July 2012. The Future of Boards: Meeting the Governance Challenges of the Twenty-First Century asks two important questions: What role is appropriate for the board? And how can the directors understand enough about the company to meet their responsibilities effectively?
The economic shock of 2008 appears to have caused many directors to reconsider what their boards had been doing and to question whether they could or should be acting differently.
“I really do think it’s time for a lot of reflection by boards right now about what we could have done better in the last six months to a year,” one director said. “What did we miss? I think it’s always great to have time to reflect backward about what we learned about what we’ve just been through, or what we’re going through, and how we could have served the shareholders better if we had spent our time a different way.”
We have blogged extensively about risk management and how CEO’s would rather not address risk issues because the responsibility for cause and effect resides with their seat. So, should coproate boards be more active when things are good?
Should Board Presidents take and active role to make sure that the risk-management processes are in place, that the financial control processes are in place, so that they’re assured that the organization has the controls and procedures that will red-light or highlight risks when they need to be highlighted?
This is not a “How To” book but rather poses point and counter point dialogue for critical thinking important for board discussion and review.