Distinguished governance experts offer cures for what ails our boards of directors
In light of corporate malfeasance in recent years, the governance of corporations has been receiving great attention from regulators, researchers, shareholders, and directors themselves. Based on Richard Leblanc's in-depth five-year study of 39 boards of directors of both for- and not-for-profit organizations, Building a Better Board goes behind the scenes to reveal the inner workings of boards of directors, including how they make decisions.
Recently chosen as one of Canada's "Top 40 Under 40"(TM), Dr Richard Leblanc is an award-winning teacher and researcher, certified management consultant, professional speaker, professor, lawyer and specialist on boards of directors. He can be reached at email@example.com. James Gillies, PhD (Toronto, Ontario, Canada), is Professor Emeritus at the Schulich School of Business, York University, where he serves as Chair of the Canada-Russia Corporate Governance Program.
Never before in history has corporate governance received as much attention as it now does. Recent corporate scandals and revelations of questionable business ethics have forced companies and their leadership under the microscope. To deal with the problems, legislation, codes of conduct, and guidelines for corporate governance practices are at an all–time high. Most of the recent prescriptions for improving corporate governance (including the Sarbanes–Oxley Act ) focus on the structure of boards—their size, composition, independence, and so on. But this book shows there is no direct correlation between board structure and corporate performance. Indeed, many of the notorious corporations that failed at the turn of the 21 st century had exemplary board structure, made up of a majority of outside directors. So what are the characteristics of an effective board, if structure and composition alone do not guarantee performance? Inside the Boardroom goes where few have gone before—behind the closed doors of actual boardrooms—to reveal how boards really work. Based on a five–year study, this book goes behind the scenes to reveal the inner workings of boards of directors, candid interviews with directors, and a comprehensive investigation into boardroom processes. It challenges the status quo thinking on corporate governance and provides ground–breaking prescriptions for building better boards. Reveals inside information on how boards, and the individual directors who lead them, make decisions. Focuses on board processes, not structure, as the key to effective governance and corporate performance. Explains how boards should be constructed so that, as well as performing monitoring and compliance activities effectively, they also add real value to the enterprise. Introduces a new classification scheme (The 10 Cs of Director Behaviour) for identifying and selecting types of directors based on behavior, competency, and independence, and shows how to determine the ideal balance for maximum board effectiveness. Offers practical advice on building a better board, including: how to determine and assess director competencies, how to deal with dysfunctional directors, how to recruit and retain quality directors, how to create position descriptions, how to develop director orientation and education programs, and how to establish performance standards for the board and its individual members. Features compelling first–hand comments from directors, regulators, chief executive officers, and shareholders that offer candid, and sometimes shocking, revelations of what really goes on behind the boardroom doors. Provides valuable insights and prescriptions for corporate boards in any industry, government corporations, and not–for–profit organizations. Praise for Inside the Boardroom "Leblanc and Gillies have written a great book about boards of directors that focuses the reader’s attention where it should be—on the behavior that takes place in the board room! They provide important insights about what behavior leads to effective boards and what does not. It is a ‘must read’ for all concerned with corporate governance."–– Jay W. Lorsch, Harvard Business School "Regulators, institutions and corporations are beginning to see the wisdom of this new research on governance. It goes past the ordinary—independence, retirement age and the like—and gets to the real heart of governance issues—skills, behavior and performance. Nexen has already applied many of these practical insights of Dr. Leblanc. Boards, Directors, Chairs and CEOs are well advised to see this book as a valuable ‘leg–up’ on what is sure to be the next wave in governance." –– Charlie Fischer, President and CEO, Nexen Inc. (one of Governance Metrics International’s 26 perfect 10.0 companies—out of 2,600 worldwide entities) "Leblanc and Gillies have transcended the clichés of misleading mechanical governance checklists to reveal the genuine essence of good governance—a competent, engaged, honest set of directors with an effective means of communicating. Happily this book offers a much–needed alternative to the quicksand of conflicted self–serving metrics. Anchored in first–hand research, they provide tools for improving the human side of board diligence." –– Professor Jeffrey Sonnenfeld, Associate Dean, Yale School of Management "So many of the academic studies have tried to draw conclusions about what works and what does not by analysing structures. It is process, the way in which board members work together that counts and here you clearly have the experience to give us all valuable guidance." –– Sir Adrian Cadbury, Author of Corporate Governance and Chairmanship: A Personal View "Dr. Leblanc has only two or three rivals in the world in the subject area. The outstanding feature of Dr. Leblanc’s work is that it combines a strong conceptual framework with a wealth of real, practical experience. He laces his theoretical discourse with the recent experience of the boards of many real and important companies." –– Ralph Evans, Chief Executive Officer, Australian Institute of Company Directors " Inside the Boardroom is an important and valuable contribution to the growing literature on corporate governance. The authors successfully bring together the growing body of research with practical and pragmatic insight. Their perspective on ‘function not form’ and their typology of directors is especially helpful in understanding the real issues involved in the world of boards of directors." –– David A. Nadler, Ph.D., Chairman and CEO, Mercer Delta Consulting, LLC "A wonderful and pragmatic guide to building high performance boardrooms." –– Jay A. Conger, Professor of Organizational Behaviour, London Business School; Research Scientist, Center for Effective Organizations, University of Southern California; and Co–author, Corporate Boards "Dr. Leblanc’s study is one of the most important pieces of original research in governance in the last 20 years. Based on an observation of the inner workings of actual corporate boards and extensive interviews, Dr. Leblanc’s conclusions take thinking about corporate governance to a new level. The implications of his work for boards, search firms, rating agencies and directors are extremely important. Dr. Leblanc turns our attention to competencies and behaviours and away from simplistic concepts of independence. The practical implications for ‘building a better board’—position descriptions, competency matrices, director behaviour types, assessments, strategic alignment and recruiting—are all in this book." –– Geoffrey Kiel, Professor of Management, University of Queensland, Brisbane, Australia, and Co–author, Boards that Work and Board, Director and CEO Evaluation "After three decades of laboring in the governance vineyards, we at the National Association of Corporate Directors (NACD) might be forgiven if we dared complain that despite progress there is fundamentally ‘nothing new under the governance sun.’ After all, since our founding in 1977, we have seen cycles of scandal, reform, and rulemaking, with each new generation rediscovering the timeless truths our Association has preached all along. But Inside the Boardroom does indeed offer a glimpse at true change ahead, in fulfillment of its title’s bold promises. Based on interviews, direct observation, and service as directors themselves, the authors describe how boards ‘really’ work. They see the key to excellence not in structure but in director competencies and behavior linked to corporations’ strategic needs, and predict a future ‘revolution’ accordingly. Directors will be recruited for who they truly are, not for what predetermined slots they fill. These well chosen directors ‘will demand effective continuing education and induction programs,’ as well as ‘proper board information and effective board mechanics and communications,’ while making ‘greater use of consultants, educators, and advisers.’ Inside the Boardroom not only prophesies this change, but shows boards how to cultivate it." –– Alexandra Reed Lajoux, Chief Knowledge Officer, National Association of Corporate Directors, Washington, D.C. " Inside the Boardroom is based upon research involving observations of board meetings and interviews with chairmen and directors from many different types of listed companies. The analysis contained in this book provides one of the most stimulating and interesting insights into board effectiveness and dynamics in recent years. The book provides an invaluable framework for all types of boards to improve their effectiveness using board competencies and behaviours as the key to explaining why certain boards succeed whilst others fail. This is a ‘must–read book’ for corporate directors and corporate governance practitioners." –– Chris Pierce, CEO Global Governance Services Ltd, Former Professional Standards Director of the UK Institute of Directors, London "Professors Leblanc and Gillies have pushed aside the veil that surrounds corporate boardrooms. Researchers can only examine what they can see, enabling many board realities to remain shrouded in mystery. This ground–breaking study, however, found that interactive processes, director characteristics, and structure—in that order—are important to effective governance, ironically the reverse order of their visibility to the outside world. From my experience, the same phenomenon holds true for nonprofit boards as well. Breaking the seal on the sanctum may hold most immediate appeal to outside observers, but the ultimate beneficiaries will be shareholders and directors themselves. In the flurry of corporate governance books now out, this one is a must–read for directors and all who observe them." –– John Carver, Ph.D., Author, Boards That Make a Difference , John Carver on Board Leadership , and Co–author of Reinventing Your Board and Corporate Boards That Create Value "I know from first–hand experience that Richard Leblanc’s assessment model of boards of directors works and is leading edge. ...