Corporate Board Members Walk a Fine Line

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When you accept a position on a corporate board, you become part of the culture, ethics, priorities, logic, metrics, reputation, and the public perception of the corporation. A few of a corporate board’s primary responsibilities include hiring the CEO and providing clear logic and metrics for performance review and compensation.  Board members have a fiduciary responsibility to the shareholders. A board has oversight responsibility (stick your nose in) but should not interfere with the actual management (put your fingers in) of the corporation.

Those sentences are clear enough…right?  But walking the fine line can be difficult.

A recurring topic of debate/discussion among experienced directors who serve on corporate boards focuses on “Nose and Fingers.”

Imagine you serve on the board of a major corporation that practically created the entire industry. Your company consistently makes money for its shareholders. Your CEO is the son of the Founder, who has been an industry icon for decades. There are risks associated with your industry so customers are asked to sign documents acknowledging that they understand and accept those risks.

To be more specific, you are one of the directors serving on the board of CARNIVAL. After several months following the incident, one of your ships is still leaning in shallow waters off the Italian coast while another ship in your fleet is being towed into an Alabama port after its main engine and sewerage systems have failed.  As a board member, you are undoubtedly concerned about the negative media coverage and possibility of law suits. But how far would/could/should you go?

It is very easy for someone from the outside looking in to be a “Monday Morning Quarterback.” Some media personalities were quick to demand answers about why passengers were left on the TRIUMPH for so many days following the loss of the main engine.

Give this some considered thought. When there is an incident, should you (as a board member) speak to the press? Should you support your CEO or “throw him under the proverbial bus?” Should you ask questions about the value of passenger safety compared to corporate profit? Should the board request a presentation from the company’s Chief Risk Officer? Should the Crisis Prevention and Management Plan be reviewed?

If you as a board member, (even though you are very bright and experienced) step in to do the job(s) that executives and managers are supposed to do, why is the company paying those people?  Should the board establish a special committee to review recent crises? Should the board convene the executive compensation and performance review committee to revisit its logic and metrics? Should you resign because your suggestions about passenger comfort and safety have been ignored?

Note: Think beyond the negative media coverage. Consider the distinct possibility that the shareholders, board members, executives, and managers have been and are perfectly happy with how things are handled at CARNIVAL.

 

 

 

About Aldonna Ambler:
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.

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