Owning Up: The 14 Questions Every Board Member Needs to Ask [Hardcover]

Not a bad book. I kinda liked it. It reminded me of many of the questions that would pop up as I examined corporate board meeting minutes in large securities fraud cases I have worked on as an attorney. The book was not overly short (which has been a problem with this author recently), and I found it to be well written. Included is an introduction and 14 chapters as follows:

0. What Boards need to know
1. Is our Board composition right for the challenge?
2. Are we addressing the risks that could send our company over the cliff?
3. Are we prepared to do our job when crisis erupts?
4. Are we well prepared to name our next CEO?
5. Does our Board really own the company strategy?
6. How can we get the information we need to govern well?
7. How can our Board get CEO compensation right?
8. Why do we need a lead director anyway?
9. Is our governance committee best of breed?
10. How do we get the most value out of our limited time?
11. How can executive sessions help the Board own up?
12. How can our Board self-evaluation improve our functioning & our output?
13. How do we stop from micromanaging?
14. How prepared are we to work with activist shareholders & their proxies?

I was a little surprised about #3 above. I expected the question to read more like: "Are we doing all that is necessary so crisis does not erupt?" And #4 was a little off in my humble opinion, too. Why only be ready to name the next CEO? What about all the other important executive level officers that are critical to the running and operation of the company?

I was surprised there was not a chapter on conflicts of interest and appearances of impropriety. And I was surprised there was no chapter on whether the company does good internal audit work and the Board has a stellar audit committee.

All in all, I found this book to be a good read and certainly topical in today's economic and business environment where large corporations are being run by people who really don't know what they are doing for the good of the order. They do know what they are doing for their own benefit, though. The book's content is not earth shattering. Nor is it particularly long. If it were priced no higher that $22 I would not complain. But the suggested retail price of $29.95 seems a little steep to me. 4 stars!

Ram Charan says that "if you have no appetite for risk, you shouldn't be on a board; it will inhibit the CEO from making bold and necessary moves and potentially company-saving bets."

This "go-to adviser" for corporate boards and CEOs, also says that boards must "own up" to its accountability for the performance of the organization and reinvent the content of their work and modus operandi. He preaches, "Governance now means leadership."

Board governance often has fuzzy boundaries and is never easy, but this excellent author/authority has 14 cringe-type questions. If you're a long-time reader of my eNewsletters and/or my Amazon reviews, you may recall my enthusiasm for two of Charan's other books: the best-seller Execution: The Discipline of Getting Things Done, with Larry Bossidy, and Leaders at All Levels: Deepening Your Talent Pool to Solve the Succession Crisis (J-B US non-Franchise Leadership). His stuff is reliable, insightful and best of all, highly practical.

Charan doesn't waste words, firing this question onto the board table in the first paragraph of Chapter 1/Question 1: Is Our Board Composition Right for the Challenge? He writes, "The role of the board has unmistakably transitioned from passive governance to active leadership with a delicate balance of avoiding micromanaging. It's leadership as a group, not leadership by an appointed person." He adds, "With the right composition, a board can create value; with the wrong or inappropriate composition, it can easily destroy value."

He recommends that every board member and board prospect complete a "skill assessment matrix" to assess the board's overall strengths and weaknesses. "The process is important because a board full of generalists is not good enough anymore," he warns. Reference checking of board members (well beyond the basic level) is now an absolute necessity. The biggest red flag to avoid: a board nominee with a big ego.

The discussion of board member succession is worth the price of the book. Insights: 1) the process may take up to three years; 2) many CEOs are limiting their service on other boards to just two, or often just their own board; 3) to get the right mix of board members--for rapidly changing needs--many boards are encouraging incumbents to step down early. (Not easy--but critical.) Perhaps most critical: "Board service is always more attractive when the prospective director knows the board has its act together--that the board is thorough in covering its bases and functions well as a group."

Effective boards will want to use this book at an annual board retreat--or address one or two questions per board meeting over the next year or more. The book can also be read topically, based on your current hot issues. I started with Question 13: How Do We Stop From Micromanaging? All 14 have zinger qualities to them. My favorites, based on my board consulting work, include:
--Question 11: How Can Executive Sessions Help the Board Own Up?
--Question 12: How Can Our Board Self-Evaluation Improve Our Functioning and Our Output?
--Question 2: Are We Addressing the Risks That Could Send Our Company Over the Cliff?
--Question 4: Are We Well Prepared to Name Our Next CEO?
--Question 5: Does Our Board Really Own the Company's Strategy?

The best practices for the strategy question are both brilliant and practical, but the CEO will need to dramatically increase face time with board members. But the pay-off could be huge. He notes, "Strategy should always be in the back of directors' minds. It helps to have the strategy brief or a two-page sheet of bullet points in the binder for every meeting." Then Charan cautions us, "If the board and the CEO have lasting substantive differences, they have a choice: stay with the strategy or replace the CEO. Consider that management has a shelf life too, just like the strategy."

Corporate directors have their hands full. They must help their companies prosper, keep their shareholders happy, establish sensible CEO performance standards, and evaluate strategy and risk in a volatile business climate. How can board members keep all those balls in the air? These dilemmas have no easy answers, but Ram Charan, best-selling business author and leading expert on corporate governance, provides excellent suggestions for this formidable balancing act. Though his text sometimes digresses - interestingly - from its mission, Charan provides board members with many useful, if not entirely new, insights. If you are a corporate director or even if you sit on a nonprofit's board, getAbstract believes you can gain a lot from reading this superb, savvy book.