Horse-Sense Governance

• The Duty of no bull#$@*: No hiding behind clever business jargon and gobbledygook technical words when describing the business to shareholders and the public. Good boards are honest, fess up to mistakes when they need to, and don’t give anyone a reason to question what they’re saying or doing.

• The Duty to speak up: An unwritten rule of proper society prohibits discussing tough stuff out in the open. However, the opposite is true in the corporate board room. Attentive directors voice opinions and concerns based on their experience. What allowed the corruption on Wall Street and in our boardrooms to occur was fear-based silence and complacency. It takes courage to speak out, but we must.

• The Duty of suspicion: When engaged directors read management reports, they don’t simply read. They analyze the information and are curious about every detail. They ask as many questions as necessary in order to be comfortable that they know everything they need to know.

• The Duty to drain the swamp: You know that CEO who needs to be let go and everyone knows it but is afraid to do it? You remember that quality issue hiding in the closet that nobody wants to talk about? Engaged directors don’t let anything hide in the swamp. They know it’s their job to face the alligators.

• The Duty to avoid self-interest: Technically, conflicts of interest might be defined on a director-and-officer questionnaire that’s quickly dispensed with. But engaged directors think continuously about potential conflicts and use common sense to steer clear of even the slightest hint of conflict.

• The Duty to achieve: The bottom line is that corporate directors have a duty to ensure that the company achieves its goals. That means ensuring that the business is run by ethical, smart people executing a solid business plan and focused on a common strategic goal. But boards cannot simply hold management responsible for achieving company goals. The board needs to own the goals and strategies as well.

• The Duty of horse sense: No matter how many titles and degrees they hold, enlightened directors know that using intuition, logic, and common sense is what will keep them out of trouble. Follow the simple rule: If it looks, walks, and smells like a skunk, it’s a skunk!

Serving as a corporate director is not for the weak of heart or spine, or for those simply looking to improve their resumés. Board service is a demanding job, even for the most experienced executives. Along with the great honor of serving on a board come great responsibilities to learn the business and its industry, exercise independent leadership, and insist on the highest ethical standards. Get it right and you’ll enjoy the journey of service. Get it wrong and your reputation could be forever tarnished.