Predicting the Future of Corporate Boards

This post comes to us from William Klepper, a Professor of Management at Columbia Business School. The post is based on Professor Klepper’s recent book, The CEO’s Boss: Tough Love in the Boardroom.

The current recession and business failures have brought renewed attention to corporate governance.

Over a period of years, I have developed and presented a series of business cases to corporate directors in my role as professor of management and Academic Director of Executive Education at Columbia Business School. These cases allowed the directors to consider inflections within the business cycle, and how they could survive the subsequent demands on them and their CEOs. As the discussion ensued with these directors, it became apparent to me that an organized body of knowledge could help facilitate their fiduciary roles as the CEO’s boss. With that knowledge, it becomes much easier to understand what they need out of their CEO, and when they need to step in and show a little “tough love” to a CEO going off-course, and what the future holds for boards of directors. In my recently published book, The CEO’s Boss: Tough Love in the Boardroom, I make several predictions about how the dynamics of the board will change; the following is an extract. [1]

  • 1. Board will become more egalitarian, participatory, and regulated. Shareholder activism will continue to expand the slate of director nominees. As a result, board membership will be open to more individuals than in the past. These newly constituted boards will be known for the full participation of all its members – no “free riders.” However, the activities of the board will be more regulated by the governance reform measures.
  • 2. Directors will “run” for a seat on the board, not dissimilar to a political election. The aspiring directors will need to go beyond being vetted by the governance committee and accepting their nomination to the board. Directors will need to campaign, as any candidate would for public office. The CEO’s will no longer be able to “anoint” without election or discussion – the days of the corporate “party boss” are over.
  • 3. Shareholders will have input in deciding the best board chairperson. Shareholders will want a say on who should chair their board of directors. Savvy CEO’s will openly solicit the feelings of the company’s significant shareholders, as well as the independent directors, before assuming that they should be the one to fill that seat at the table. As a result, the number of nonexecutive chairpersons will increase in the coming decade.
  • 4. Load independent directors will become the chief process leaders of their boards. For boards to be highly functioning teams, process leaders need to attend to the group’s dynamics. The task of the board will be managed by the chairperson, but the relationship will be managed by the lead independent director. CEO’s will rely on this chief process leader to help them forge an effective partnership.
  • 5. The strategic risk profile will be a recurring item on the board’s regulation agenda. The risk profile of the company will be the work of a committee-of-the-whole of the board. Strategic risk will be a standing agenda for its regular meetings. Shareholders will demand that their treasure is being wisely invested in the business and not at risk due to inadequate oversight.

When CEO’s derail, the whole company feels the crash. By stepping up to the role of the CEO’s boss, the board can help the CEO make the right decisions for the business and can show “tough love” when it’s time to align the leadership agenda, practices, and style with the current cycle of the business. By heeding these predictions and the strategies delineated in this book for strengthening the relationship between the board and the CEO, companies have a chance of making the next decade more successful than the last.


[1] The extract is excerpted from The CEO’s Boss: Tough Love in the Boardroom by William M. Klepper with the permission of the publisher, and is copyright © 2010 Columbia University Press (all rights reserved).
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One Comment

  1. Mark J. Guay
    Posted Monday, August 9, 2010 at 5:02 pm | Permalink

    I agree – process is very important for transparency and control. But at the end of the day, there is one fiduciary dynamic I think that really must be asked and answered and that is how does a company define what is the “trust” of its shareholders, its customers and its employees mean to it? The term is written on the back of a dollar bill. D.H Lawrence wrote a love poem about it. Stephen M. R. Covey wrote a famous business book about the “speed” of it. Ronald Reagan used it to describe our nuclear position with Communist Russia. General Robert E. Lee used the term to describe leadership traits. And when all is said and done, as they say in one midwest state, “I am from Missouri – you have got to show me.”