To Manage or Not to Manage?

April 20, 2009 at 3:25 pm

The indistinct line between managing and operating versus planning and strategy as it relates to the boardroom and board director behavior is in need of real examination.

For years corporate governance writing and thinking has been consumed with its aversion to micromanagement on the part of board directors. The flow of information has been analyzed and the types of information appropriate for board consumption has been debated ad nauseum. There has been a prevailing concern with the board receiving too much information. In fact, many of best-selling corporate governance books devote pages to information flow and recommend carefully considering what information the board receives.

While I do believe the board should not be bogged down with data and unnecessary reports, I think the willingness to obtain more information than has been the norm in the past would have helped many of today’s boards better understand the companies to which they serve. Increased transparency for the board would hopefully lead to better business decisions and less corporate turmoil. Board directors need to feel that it is appropriate to ask for details. Board directors need to feel comfortable asking questions and requesting elaboration, elucidation and clarity.

We need to get over the fear of micromanaging that has probably pushed governance thinking to the opposite extreme of omission. There is clearly a way for directors to be adequately informed while maintaining and fundamentally improving their effectiveness.

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Entry filed under: Corporate Governance. Tags: , , , .

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