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Pit bulls and other directors
Filed in archive boards of directors by leon on March 1, 2008
pitbull.jpg

Sitting on a dysfunctional board is soul-destroying. But what are the pathologies? Some good insights from Beverly Behan at BusinessWeek in her piece Boards Behaving Badly.

Types she identifies are the "pit bull" who is a hostile bully, the "deer in the headlights" who lacks experience and understanding who struggles with the board's agenda, the "windbag" who dominates the discussion to the point where other directors can't get a word in edgewise, and the "pet rock" who never says anything.

Behan suggests several approaches. Like not ignoring the problem, giving the director another chance and the space to fix the issue, and considering a peer review.

Not bad, but let's take it further.

Firstly, boards and shareholders need to assess regularly the skills and behavior of individual board members. Non-performing directors should be asked to resign. Directors would also be required to assess the performance of their chairmen at least once a year - if chairmen failed to lift their game or were unwilling to be assessed, they too should have to step down.

Secondly, let's be careful putting too much emphasis on the formal "independence" of directors. Independence is a state of mind, it is very difficult to regulate and it matters a whole lot less than we think. I'm not suggesting that independence does not matter. But you can be formally independent and not psychologically independent within the boardroom; you can be conflicted as a director and be very independent.

And finally, who should have the last word on sacking directors? Should it be the shareholders, or the directors themselves?

The answer to that is obvious. Directors in the first instance are the best judges of what directors are non-performing. What shareholders should be asking is: "Do you have position descriptions for the chair of the board, for the chair of committees and for independent directors and, if not, why not? Do you have independent director assessments based on those position descriptions and if not, why not?"

Permalink: Pit bulls and other directors
Tags: dysfunctional  boards  directors  other  2007  other+directors  bulls+other  conrad+black 
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