In the year 2002, Warren Buffett made an admission that he had not been as vigilant as he should have been in his role as Director of the various subsidiaries of his holding company, Berkshire Hathaway. In a letter to the shareholders he wrote “ Too often I was silent when management made proposals that I judged to be counter to the interest of the shareholders. In those cases, collegiality trumped independence and a certain social atmosphere presides in boardrooms where it becomes impolitic to challenge the Chief Executive.
Kevin Sharer, Chairman of Amgen, the US biotech company, portrayed a very different relationship between board and chief executive. “ Working with the board is vital, complex, and beyond your prior experience. It is among the most complex human relationships, especially if you are the chairman, when you are their boss, and they are your boss. Get the relationship right or it will hurt you.
These two very different experiences open a new book, Boards that Lead- When to take charge, When to Partner and When to stay out of the way. The central premise of the books is a plea. “ Governing boards should take more active leadership of the enterprises, not just monitor its management?
The growing complexity of markets and strategy, the authors say, is one of the biggest challenges for board members. It also means that they cannot afford to sit back and rubber stamp executive’s plans.
Boards often fail to do their job, they point out, for example failing to do their due diligence. They cite the example of Yahoo’s Chief Executive Scott Thompson. After a few months in the post, it was discovered that he had listed a degree in both accounting and computer science, but had actually earned only the first.
A good book to read move from Delivering to Leading.