Why are Boards barely mentioned in the literature when
talking about leadership in any form?
One of the most important roles of the Board, in addition to
their fiduciary responsibility---or as a part of their fiduciary responsibility
-- is to ensure the organization has a strategy that provides for the long term
viability of the organization and that the underpinnings of the foundation are
a set of values that reflect an ethical and moral organization
Based on a survey of 1,450 executives from 12 global
corporations, among the 21 crucial competencies they identified as important
for global leaders were “ability to articulate a tangible vision, values and
strategy.” (Ireland & Hitt, 1999, p. 48) How is that vision,
those values and that strategy determined and how is it measured? Does the CEO
do it alone without input or accountability? Does the CEO just have a Board
that “rubber stamps” their vision, strategy, values without taking into
consideration the purpose of the organization?
Rowe talks about different leadership styles in his article
on “Creating wealth in organizations: The role of strategic leadership”. (Rowe, 2001) In this article he
talks about the managerial leader, the visionary leader and the strategic
leader:
- The managerial leader thinks narrowly and maintains the status quo, this may bode well for the organization in the short term but can be lethal in the long term.
- The visionary leader thinks broadly, often uninvolved in the nuts and bolts of the business, and can go in tangents in order to get to the future, those tangents can potentially create disaster for an organization if the vision turns out to be wrong.
- The strategic leader, who meshes a little bit of both of these styles and moderates them, is considered by Rowe the type of leader that can create wealth in organizations.
But, with each of these styles, where is there mention of
the role of the Board? If the strategic leader has vision, and understands
operations and ensures fiscal stability, how do we know that strategic leader
is doing the right thing for the company and its long term future? Who asks those questions and who holds them
accountable? Can the CEO be a strategic leader, who creates wealth, but who
also creates their own “personal fiefdom” by strategically leading their
companies for their own particular purpose? (Grant, 2010, p. 427) Examples of this
have been well documented, Enron, WorldCom, Tyco, etc. Where was the Board and
why did they allow the vision, strategy and values of these CEO’s to continue?
I would venture to suggest that the Board plays a critical
role in the strategic leadership of the organization and in ensuring its long
term viability. According to OECD Principles of Corporate Governance, the Board
has the responsibility to “ensure the strategic guidance of the company….” (Grant,
2010, p. 428)
The purpose of the Board in both privately held and publicly traded companies,
is not to just ensure return on investment for shareholders (that can happen
with strategic leadership that is not committed to the right strategy, vision
and values) but also to provide
strategic leadership to the C Suite (CEO, CFO, CMO, etc.) and holding those
leaders accountable to a high standard of performance that benefits the
organization in the long term. In fact, I think the Board needs to run
interference between the CEO and the shareholders when the strategy is right
but it requires time to demonstrate to shareholders the value of that strategy.
What do you think?
Barbara
is the president of Fahey Associates, Inc., a healthcare executive search and
management consulting firm. She was the chair of the Board of Trustees of Holy
Cross Hospital in Chicago and is currently the chair of the Board Quality
Committee and co-chair of the board subcommittee on quality and finance. She is
a student in the doctoral program at Benedictine University’s Center for Values-Driven Leadership.
Bibliography:
Grant, R. M. (2010). Contemporary Strategy Analysis
(7th Edition ed.). Chichester, West Sussex, United Kingdom: John Wiley &
Sons, Ltd.
Ireland, R. D., & Hitt, M. A. (1999). Achieving
and maintaining strategic competiteveness in the 21st century:The role of
strategic leadership. Academy of Management Executive, 43-57.
Rowe, W. G. (2001). Creating wealth in organizations:
The role of strategic leadership. Academy of Managment Executive, 81-94.
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