Archive for March, 2009

Succession planning…yet again! The Apple Case.

I have been following the Steve Jobs’ illness and Apple story ever since it unfolded. There has been much debate about the directors’ culpability in disclosing the severity of his predicament. Should the directors, and Jobs for that matter, have disclosed more details sooner seems to be the major question.

According to former SEC Chairman Harvey Pitt, there is no statute or SEC rule specifically requiring disclosures about executives’ health or personal affairs (for example, stroke, heart attack, drug addiction, alcoholism, divorce, et cetera). Personal information is treated on a one off basis which of course opens the doors to some intersecting deliberations. However, the whole magnitude of this debate is in and of itself fascinating.

I do believe that companies should disclose the serious illness of their CEO. However the fact that it is as great an issue as it is at Apple is the problem and not the mere fact of the illness itself. In other words, shareholders do have a right to know significant details that may impact the CEO’s ability to run the company. On the other hand, if there is a strong senior team in place at the organization and if the CEO has done his or her job, they will have several possible successors groomed to take over for the CEO anyway. In this instance the appointed individuals can almost seamlessly step into to the CEO role, at least temporarily. This can take away the crises nature of the CEO’s infirmity.

As the old adage goes: “it takes a village…” No company’s success should be reliant on one individual as visionary as they may be. If this is observed then disclosure of an illness or other incapacitation will merely be another of the countless and varied details of a company’s operation and not a catastrophe.

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March 18, 2009 at 7:16 pm

Look Before you Leap!

In today’s challenging job market, can we afford to be fussy about a new job opportunity? Should we question what a potential employer tells us?
How can we not!

In the classic 1967 Holmes & Rahe Scale of Stressors which is referred to authoritatively even today, stressors associated with one’s work occupy seven of the top forty-four slots. We all know of the anxiety associated with a difficult work environment or with changing one’s job. This tends to be exacerbated by a slow economic environment such as the one we are experiencing now.

However, in spite of these factors and probably even more so because of them, it is essential to do your due diligence before moving into a new job. The job description and the company web site are just starting points. These will provide fact based information that the company wants you (and everyone else) to see. These are essentially public relations pieces and as such provide only the beginning of the information that must be gathered.

More important possibly is the information that you do not get from a web site or job description, cultural information including communication, politics (or lack thereof), ethics and morals are what in the end will provide enlightenment and aid in making the right career decision.

How can one get at these essential pieces of information? Start with talking with as many people in as many different types of roles in the company as is permissible. Once you gain an understanding of different perspectives and experiences within the company, speak to former employees. This step is as important as the previous one because those that are no longer with the company will possibly provide a more candid view of what to expect. Bear in mind that ex-employees will have different motives for providing information and as such the best understanding will come from a synthesis of all the various views and impressions that have been gathered. Speaking to clients and vendors and their experiences will provide yet additional data points.

As in all decisions, beware and be wary, even when jobs are scarce. In the end a bad career move will be financially and emotionally costly – avoid them if at all possible.

March 12, 2009 at 1:01 pm

Conflict and the Current Governance Dilemmas

meeting conflictInterestingly, whenever conflict is mentioned as it relates to business or more specifically the corporate boardroom it is always in the context of conflict resolution. It seems to be taken for granted that conflict is undesirable and resolution is always the goal.

Perhaps instead of universally determining that conflict is objectionable, conflict be calibrated so that what we can call “constructive conflict” is deemed as actually beneficial for a board and ultimately the business. Kathleen Eisenhardt, Jean Kahwajy and L.J. Bourgeois said it very well in their Harvard Business Review article entitled: “How Management Teams Can Have a Good Fight” when they stated that “The absence of conflict is not harmony, it’s apathy.” They concluded in their research that provided that conflict does not turn interpersonal it can be useful for team members.
A Board of Directors can in certain ways be considered a team in that there is a shared fiduciary responsibility to the company on which they serve. As such, what I am calling constructive conflict or healthy disagreement or even vigorous questioning of the status quo should be encouraged and even celebrated. Board members should feel free to rigorously query management, reports and any data that is received. The boardroom should be an environment of open deliberation without personal criticism. It is only in this way that the organization can truly benefit from the wisdom, knowledge and insight of their board.

March 6, 2009 at 5:50 pm

Director Recruiting and The Baseball Draft!

There has been a recent upsurge in the amount of online services designed to match potential board directors with seats on a board. On the surface this may seem like a reasonable and economical alternative to the traditional engagement of a Recruiter. However there are inherent limitations in the “all technology” model that become painfully apparent when it is used at one of the most senior and alas particularly visible parts of the corporation.

Director registration services allow self-selected potential board directors to sign up for consideration by companies in need of a new director. Companies, on the other hand, get access to prospective directors that meet the various objective criteria they have set out. Third party advice, intervention, evaluation and analysis are typically not part of the process or at best, optional. Without this what the company ends up with are matches made on the basis of key words and other tangible criteria. In the current environment, can companies really afford to bypass professional outside advice in favor of a computer matching system? Shouldn’t the selection of a new director be a strategic, and analytical process that involves looking at the “universe” of potentials and then selecting and ultimately recruiting the very best?

An analogy that comes to mind and one that most are familiar with is the baseball scouting process. A good baseball scout is considered the trusted advisor to the General Manager of a team. The best baseball scouts have the notable gift of being able to identify future stars very early on in their development and careers. Imagine for a moment that this process was delegated to computers. Players could register and teams could use a database to find their new talent. This is, of course, ludicrous. Nearly all would argue that there is no substitute for human intervention in the drafting of baseball players – should we expect anything less for the governing of business?

A good recruiter brings knowledge and value to the boardroom way beyond the board search at hand. The board draft process (to borrow a baseball term) should always include a strategic evaluation of the current board overlaid with the company’s strategic plans and its operating environment. Attention to company culture and board culture is extremely important for the best boards do not simply check criteria boxes, they encourage true dialogue, true engagement and robust commitment. Indeed, these dimensions and characteristics cannot be properly gleaned from a database!

March 2, 2009 at 2:21 pm


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