DONALDSON G., A New Tool For Boards: The strategic Audit. Harvard Business Review, July-August 1995
In the aftermath of the wave of restructuring that peaked in the 1980s, the corporate oversight process has received unprecedented public attention, and investor activism has resulted in numerous proposals for reform. Board members, seeing the number of stockholder lawsuits and the escalating cost of directors’ and officers’ liability insurance, are feeling pressure from their increased risk as well. Even more important is the pressure from holders of large blocks of stock (pension and mutual funds), from judicial and regulatory authorities, and from the financial press—all of whom are calling for boards to be more active.
This attention has had an impact on the nation’s public corporations and has brought about a change in boardroom behavior that is significant, if often imperceptible to outsiders. Outside board members are now much more willing to stake out independent positions in boardroom discussions and, at times, even openly oppose the chief executive when they believe the vital interests of the corporation are at stake. Recently, directors’ independence led to the ouster of the incumbent chairman or the CEO at Morrison Knudsen, W.R. Grace, and Kmart.
Efforts to reform the governance process have also intensified. Investors and investors’ advocates, impatient with the sporadic nature and rate of change, have proposed legal, regulatory, and structural improvements in the relationships among shareholders, boards of directors, and CEOs. Some proposals call for radical changes in the rules governing the election of directors at public corporations. Some recommend adopting certain attributes of the private corporation. Indeed, Michael C. Jensen (“Eclipse of the Public Corporation,” HBR September–October 1989) predicted that in such industries as banking and food processing the public corporation will decline, to be replaced by new forms of organization, such as the LBO partnership. Other proposals are designed to address specific issues, such as directors’ compensation or the separation of the offices of board chair and CEO.
One problem I see with many of the reform initiatives is that they are concerned only with the broad principles of governance and offer little practical guidance. More important, these proposals do not directly address the fundamental issue at the heart of investors’ concern—namely, the capacity of the board to intervene in the face of an unsuccessful or ailing business strategy. Proposals to strengthen that ability are among the most important to consider but are also the most difficult to gain consensus on and to implement. Leggi l’articolo completo