Role and Efficiency of the Board of Directors (How to Design a Company Board in a Complex Environment)

Author: (USA) Colin B. Carter, (USA) Jay W. Lorsch, translated by Cai Shutao
Publisher:
Publish Date: 2006-03-01
Features: Boards of directors around the world are under immense pressure. The scandals and collapses of some well-known companies have sparked a global wave of criticism against boards, leading to calls for radical reforms. Various "best practices for boards" have emerged, but can these fundamental adjustments truly enhance the board's ability to improve corporate governance? Colin B. Carter and Jay W. Lorsch point out that to genuinely improve the performance of corporate boards, one must remember this: contemporary company boards are primarily composed of busy, part-time independent directors who have limited understanding of the companies they oversee and spend little time on decisions regarding corporate accounting and financial policies, strategy, management succession plans, and compensation. How the board fulfills its role is a key driver of a company's success or failure. The authors argue that boards need to be redesigned. Based on their extensive experience in providing consulting services to boards of well-known companies, they outline a framework that can be applied across different countries, industries, and types of businesses. This allows us to rationally move beyond external oversight factors for board structure and the demands of most reform goals. This book shows us how to "determine the role of the board within the constraints of available time, knowledge, and the environment faced by the company." It proposes redesigning the size, leadership model, and committees that can best leverage the board's effectiveness. Select and train board members based on appropriate combinations of experience and skills. Reflect on and revise board procedures and practices to effectively change board behavior, improve communication among members, and refine the decision-making process. This book is a must-read for corporate directors, CEOs, government regulators, and any professionals involved in board work. It provides an objective evaluation of the current state of corporate boards and clarifies how boards can move forward in challenging times.