The most valuable director of all

We all have heard the stories about directors who doze during meetings, sit silent while others engage the issues, and rubberstamp the CEO before questions have been clarified. It takes no special expertise to identify these examples of deadwood, though it may take some time and skill to ease them off the board.

The more challenging task is to identify director candidates who, once elected, will become real contributors to the board.

The performance of these contributors often can be rated by the strength of their participation in spirited, in-depth reviews of management’s actions and their ability to act as a consultative resource to the CEO without being antagonistic.

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Each director should be contributing a particular type of expertise which he has developed out of his own business accomplishments and which is relevant to the company on whose board he sits — perhaps marketing, or engineering, or finance, or law, or plant management. Particularly helpful are directors whose professional strengths can buttress or compensate for weaknesses in the CEO’s training and experience.

The most valuable director of all is the one who can challenge the CEO while at the same time supporting him, a person who has mastered the difficult art of “disagreeing without being disagreeable.” These extremely rare individuals can contribute much-needed knowledge and experience and are able to help steer the business around potential hazards without displaying the type of know-it-all attitude that alienates fellow directors.

At their best, this type of director can bring up a good idea so subtly that the CEO will believe he thought of it himself. Directors of this type do much of their best work beyond the boardroom in the little-observed realm of informal governance.

A board is supposed to be made up of senior advisors with substantial years of business experience behind them. Nevertheless, be careful of letting a board get too old. An elder statesman or two can be useful, but gray hair alone doesn’t guarantee experience or the willingness to apply it. I once witnessed a director enter the boardroom in a wheelchair pushed by a male nurse. During the meeting the director died. This sort of thing can be awkward.

Even if a director is not chronologically old, extensive tenure on the board can become a negative. Directors, like managers, need to remember that each executive tends to have a finite shelf life in any given position.

After about six years of doing the same job or sitting on the same board, it is a rare bird who doesn’t begin to get a little stale. A six-to-ten-year rotation on a board, or a mandatory exit from the board at age 70, whichever comes first, might help maintain freshness and vitality.

The board should not be bored.

 

Harry J. Bruce is the retired chairman, president and CEO of the Illinois Central Railroad and a long-serving corporate director. 

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