Back to School

Scientia potentia est, “Knowledge is power.” This maxim applies on the battlefield as well as in the classroom. And given the current economic environment, it clearly applies in the boardroom. Today, in a business world that changes at a prodigious rate, professional experience and a keen business sense aren’t necessarily enough to keep ahead of the pack.

With the opportunities created by a rapidly evolving spectrum of technology and a global economic frontier that is continually opening its borders to new players, today’s executives and directors must be willing to adapt to a business and governance environment that is constantly shifting. One of the most effective ways of adapting is through the pursuit of professional development offered by executive education programs at top universities around the country.

Successful directors have all spent several thousands of hours in high-pressure, high-impact work environments in which the combined knowledge and instinct of a company’s management team must be shaped into a very specific plan of action. With this kind of real-world experience, in combination with advanced degrees already held by most directors, one might question the practical advantages of going back to the classroom.

The answer is new perspective. “Knowledge has a way of moving at a clip that eclipses very quickly that which was gained in prior formal education,” says Dr. Constantine Konstans, executive director of the Institute for Excellence in Corporate Governance at the University of Texas at Dallas. “Real-world experience is invaluable, but it tends simply to repeat the same processes and outlooks rather than expanding one’s exposure to new ideas.”

Charles Breckling, managing director of marketing at Harvard Business School Executive Education, echoes this sentiment: “The half-life of any educational experience is short. If you’re on a board and received an MBA twenty or thirty years ago, the business climate has changed to the point where you need exposure to new ideas in order to stay sharp.”

The benefits of executive education are worthwhile and far-reaching. In addition to the inherent benefits of gaining access to relevant and new information, the opportunities afforded by working with one’s peers in a “professional classroom” setting are unparalleled. “Our courses have great convening power,” says Breckling. “We bring board members from all over the world, and they in turn bring a broad global outlook you can’t find anywhere else.” In addition to the expertise of the professors, students in these programs often instruct and learn from each other, as their shared experiences provide plenty of case studies.

The range of topics covered by executive education programs entirely encompasses the modern-day business climate. Established programs at Harvard Business School Executive Education, for example, include courses in leadership, strategy, corporate governance, finance, technology management, marketing, negotiation, and personal development—not to mention custom programs designed for a specific company’s needs.

Improved Ratings

While pursuing executive education is certainly beneficial for the individual who takes the course, it also strengthens the board on which he or she sits—and not just by virtue of having the insights of this newly enhanced individual in the company. Many governance ratings agencies look kindly upon boards whose members have participated in executive education programs, and take completion of these programs into consideration when rating companies’ boards.

One such ratings agency is RiskMetrics, whose ISS Corporate Governance Services department determines the best director education programs. “The types of issues that boards are confronted with today—governance fallouts, the mortgage crisis, options backdating scandals—are so new that it’s important for directors to be able to meet with their peers to discuss and strategize,” says John Deosaran, head of product and business development, ESG Analytics, at RiskMetrics Group. “We grant accreditation to those executive education programs that allow directors to tackle the challenging problems of today.”

Because of the knowledge and new energy that a well-educated director or executive can bring back to a management team, it’s not uncommon for a company to grant time off and foot some or all of the bill for an executive going “back to school.” Since these courses can range from one-day intensive sessions to several weeks, and because enrollment fees can range from a few thousand dollars to hundreds of thousands for large groups, it certainly doesn’t hurt to have the blessing (and backing) of the corporation.