Why should talented executives serve on company boards? To answer this question, I must tell a seemingly diversionary story. I have been called twice to serve on a jury. The first trial was short and the verdict was easy, but the second time involved a complicated criminal trial where the evidence was sometimes contradictory and decisions to be made were convoluted. That trial kept me away from my business for four long days. After the verdict was decided and the trial was concluded, the judge came by to meet with us and express her thanks for our work. In addition, she patiently answered several of our questions about how the legal process had worked.
As we were exiting the courthouse, I continued my conversation with this judge. I told her that we all appreciated her comments and her recognition of our work. I asked her why she took such pains to meet with us after a long day to express her thanks and answer our questions so thoroughly. She turned to me and said, ”There are two responsibilities that we have as citizens of a democratic republic. We should take them both seriously. We cannot have a truly representative form of government unless we all vote. And we cannot have a system that involves trial by a jury of our peers unless citizens are willing to be jurors. These are both solemn responsibilities.”
This comment by a committed and thoughtful judge struck me because it expressed the clear obligations that we have as citizens in our system of government. In a similar way, those of us who are involved in the capitalistic system, a system that has created so much wealth and prosperity in our world, have a similar responsibility. Our system of enterprises that are owned by diverse investors and shareholders is only possible because we have experienced commercial leaders who are willing to represent those shareholders in the boardroom.
The independent director has a solemn responsibility to be the shareholders’ voice and to be the steward of the shareholders’ investment in the enterprise. Our capitalist system requires the hard work and thoughtful judgment of these board members to provide corporate governance and oversight as companies operate to create wealth. Successful independent board members should not be motivated by the board fees or by the camaraderie or status of the boardroom. Successful board members understand at the core that their experience, integrity and judgment are required to make our capitalist system work on behalf of the investors that they represent.
Bob Gariano is president of RGA, an executive search firm that recruits senior executives and board members for public and private companies. He can be reached at firstname.lastname@example.org