As companies the world over look to right themselves in the wake of economic uncertainty, business tomes continue to roll off the presses with advice directed toward improving board leadership and effective, ethical governance.
Crown Business, 2011
The 2011 Edelman Trust Barometer indicates that in the United States “trust in business fell by eight points to 46 percent— placing the world’s largest economic power within five points of Russia.” Above-board, transparent behavior can help build trust, and Robert F. Hurley, a professor at Fordham University, asserts in The Decision to Trust: How Leaders Create High-Trust Organizations (Jossey-Bass, 2011) that trust builds loyal stakeholders, loyal shareholders, loyal employees and strong leadership. The results are “hightrust environments” and strong business growth.
Hurley’s consulting practice, Hurley Associates, uses behavioral science to spur organizational and individual effectiveness. His book introduces the “Decision to Trust Model” (DTM), which takes into account how trust is understood differently among people and cultures and how situational factors affect trust.
For example, using the case of Bernard Madoff and his Ponzi scheme, Hurley shows how the securities dealer used situational factors to build false trust among his stakeholders. Madoff exploited his similarities with his victims (even some Madoff family members), and his “steady performance” showed capability and predictability. But there is more to trust, and Hurley argues that if Madoff’s victims had “examined these elements of trustworthiness in a more robust manner, they would have concluded, as many did, that distrust was the more prudent option.”
James M. Citrin and Julie Hembrock Daum, both directors with Spencer Stuart and leaders of the company’s CEO and board practice, share case studies based on 18 months of research into leadership transitions in You Need a Leader—Now What? (Crown Business, 2011). They illustrate that even the best due diligence is not enough to guarantee a successful leader if the overarching needs for the position, the right selection process and the company’s culture are overlooked.
The authors take readers inside Kraft, Dartmouth College, IBM and others, from the S&P 500 and Russell 2000, to private and nonprofit companies, to the Netherlands and the U.K., for a close look at the core elements necessary for an effective leadership succession process, and outline a foundation of three “essential truths” on which to base the search process:
1. It’s not about finding a “great” individual; it’s about solving an intricate and dynamic jigsaw puzzle.
2. Once you have diagnosed the need, then you can get the very best person.
3. Even the right choice can go wrong without the right process.
Steps for getting the process down, “avoiding the top traps of leadership selection,” and establishing a two-tiered approach that looks at both outside and internal candidates are presented, with examples from every type of company. In Tough Calls from the Corner Office: Top Business Leaders Reveal Their Career-Defining Moments (Harper Collins, 2011), Harlan Steinbaum, former chairman and CEO of Medicare-Glaser, takes a close-up look at successful leaders and those moments that stood out as having had the greatest impact on their careers. He recruited dozens of leading executives to share their stories.
One of them, David L. Steward, founder, chairman and CEO of World Wide Technology, cited as the largest African-owned business in the United States, recalls the “epiphany” he had while working at FedEx, when he received an award. The trophy was “an inscribed silver ice bucket.” Steward appreciated the award but saw the “empty” bucket as a sign that he had more to do.
Ronald M. Shaich of Panera Bread, Lloyd Schermer of Lee Enterprises, Danny Meyer of Union Square Hospitality Group and Shelly Lazarus of Ogilvy & Mather Worldwide are among those who also share their stories and “advice lists.” Universal principles emerge: the value of strong leadership, the ability to take responsibility, and a foundation of ethics and integrity, among others.
In Servant Leadership in the Boardroom: Fulfilling the Public Trust, Kent M. Keith, the CEO of the Greenleaf Center for Servant Leadership, builds on the ideas of the Center’s founder, Robert K. Greenleaf, a former manager at AT&T who established the organization based on the principle of what he coined the “servant-leader,” where “great leaders are servants first” and directors are servant-leaders, “concerned with the ways in which the organization serves all the people it touches.”
Keith reviews the role of the board as established by statute and in practice, and stresses that the “chair serves the board…the board is the boss, not the chair. The chair is there to help the board to do its work.” As well, Keith emphasizes the importance for the board as a whole to assume leadership and for the balance of power to be equal among all members.
Keith recounts the history of the corporation in the Western world and its foundation in government mandate and the public trust through state incorporation. The idea of shareholder primacy— in which the fundamental purpose of the company is to “maximize the wealth of its shareholders”—is challenged, and the argument made that the overall best strategy of the company, supported by some state corporation statutes, is to consider all stakeholders: employers, customers, suppliers and shareholders.
Bloomberg Press/Wiley, 2010
Robert A. G. Monks and Alexandra Reed Lajoux tackle “the present value of future worth” in Corporate Valuation for Portfolio Investment: Analyzing Assets, Earnings, Cash Flow, Stock Price, Governance, and Special Situations (Bloomberg Press/John Wiley & Sons Inc., 2010). Monks, a renowned shareholder activist, is also the author of Corpocracy and Corporate Governance. Lajoux, chief knowledge officer at NACD, is the author of the Art of M&A series with McGraw Hill.
When it comes to assessing corporate value, corporate governance inevitably comes into play. The authors acknowledge that the term “governance” is broad but “define it as accountability to owners based on disclosure and compliance with legal and ethical standards.” They reference governance guidelines from the International Corporate Governance Network, NACD’s Key Agreed Principles and the Organization for Economic Cooperation and Development.
The authors believe that “…there cannot possibly be one single model of good corporate governance that can be applied equally well to all public corporations; both ownership and corporate maturity must be taken into consideration, and a spectrum of good corporate governance models supported.” Along with countless other factors, “nonfinancial elements, such as corporate governance… drive market value.”
BenBella Books, 2011
Finally, for an unorthodox look at how to approach a right course for effective leadership, perhaps it’s time to go to the dogs. In From Wags to Riches: How Dogs Teach Us to Succeed in Business & Life (BenBella Books, 2011), Robert Vetere, president of the American Pet Products Association, and Valerie Andrews, co-author of The Business of Changing Lives, suggest that “the new model for business leaders [is]…the family dog.” Waggish chapter headings, including “My Dog Is My CEO,” “What Breed of Manager Are You,” “Reward in Real Time” and “Lead by Example,” invite readers page by page into an unconventional look at the traits we value in our leaders and others— loyalty, honesty, trust, transparency, enthusiasm— and present a convincing case for the scruffy, devoted bundle at your feet as a role model.
In chapter 2, “What Breed Are You,” the authors present a test of canine leadership traits for readers to see which “top dog” they most resemble and what traits they share with well-known corporate leaders. For instance, they suggest that Larry Ellison of Oracle and the late Steve Jobs of Apple displayed the traits of a “bloodhound” when “following [their] nose[s], moving into unsafe or uncharted territory and taking calculated risks”—but that Jobs also displayed the instincts of a husky with his “independence, and little direction from above.”
The ancient Greek philosopher and cynic Diogenes “suggested that we emulate the dog because this animal is unfailingly honest and always does his business out in the open.” Advice former BP CEO Tony Hayward might wish he had taken. Characterized as having a “lone wolf” or rogue personality, Hayward is known for keeping low cover and then publicly proclaiming he wanted his “life back” in 2010 as BP’s Deepwater Horizon catastrophe ravaged the Gulf ecosystem and human lives in Louisiana. But the “top dog has to set the tone” and “to succeed,” the authors stress, “we have to be good guard dogs, consider the welfare of the pack, and extend that care to the community.” Something Hayward and some other leaders fail to do, to the detriment of good business.
Suzanne L. Meyer is an editor with NACD.