November 04, 2013
Board Members Who Should Be Fired
Over the years, I have worked with and for a great many board members. Most of the directors were diligent, committed to their responsibilities, and a pleasure to work with. Others fell short.
In this post, I share a few examples of poor performance that I have observed. While exhibiting just one of these traits may not be cause to remove a director from the board, more than one should be.
These are not in any particular order of significance:
- Failing to read the board material until the meeting, or skimming through it shortly before.
- Failing to speak out (especially if they show disagreement later).
- Allowing the chairman or management to limit the discussion of topics important to the board. Another dimension to this problem is silently accepting the board agenda.
- Lacking complete faith in an executive or the board chair but remaining silent.
- Allowing emotion to dominate reason.
- Delegating review of the regulatory filings (e.g., with the SEC) to the single "financial expert."
- Showing deference instead of oversight to the external auditor. This includes not challenging the quality of their team, their risk assessment, or their negative comments (or lack thereof) about management.
- Not taking the time to get to know the other members of the board.
- Not taking the time to get to know key members of management.
- Not taking the time to understand the business, its external environment (regulatory, competitive, etc.), its organization, primary processes, and so on.
- Failing not only to understand the primary ways the organization provides value to stakeholders, but also not acting to address the deficiency.
- Similarly, accepting a lack of knowledge and understanding of the organization's strategies — and the risks to those strategies.
- Being reactive instead of proactive. For example, waiting for management to contact them about potential issues or opportunities instead of initiating discussions when these potential issues come to their attention (e.g., in the news).
- Accepting or continuing a board position with full knowledge that they don't have sufficient time to be fully engaged.
Have you seen these? What else comes to mind?
I welcome your comments.