A New Year's Resolution for Boards By Mark Rogers
New Year’s resolutions—for the most part, are intended to improve our life in some way (e.g. “exercise”, “eat healthier”, “spend more time with the family”, etc.). It is estimated, however, that well less than half of all New Year’s resolutions are followed through to the end of the year. Nevertheless, such resolutions are a great way to kick off the new year—pledges that set personal goals for each of us.
As I thought about New Year’s resolutions the other morning, I pondered the question of what impact such resolutions would have if they emanated from the corporate world. This past year we saw the continuing trend of corporate governance scandals—-from the international market (e.g., Olympus), national (e.g., MF Global), and locally (e.g. Chelsea Housing Authority in Massachusetts). Although each such instance has its own particular facts and circumstances, there is a common thread that often runs through these scandals— a Board of Directors that for one reason or another, fails to take appropriate action. Certainly, the most publicized instances are those which are the result of criminal behavior at the board level. Yet, the overwhelming majority of these scandals are the result of apathy among board members brought about by any number of factors—but at its core, the failure to approach their board service with the appropriate level of duty and responsibility. Such apathy can be infectious and can lead to a Board that is simply asleep at the wheel. This creates the recipe for scandal and failure.
Unfortunately, we can expect 2012 to have their own list of corporate governance scandals. The truth is that corporations and their boards are led by humans whom time has shown are prone to err. This does not mean that we as Board members need to sit by and wait for the next scandal to arise. Rather, I would like to begin the new year by challenging all board members, regardless of the type of entity they represent (public, private, or non-profit), to make a resolution to be a better board member: attend Board (and Committee) meetings; review materials in advance of Board meetings; ask questions; hold management and your fellow board members accountable; when recruiting new board members, do not settle for individuals who simply fill empty board seats—but rather search for the best candidates available; and at all times act in the best interests of the corporation.
By becoming an engaged Board, you create a culture of good governance that will have a tremendous positive impact upon the success of the corporation.