Building Better Boards

by David A. Nadler

IN BUSINESS, AS IN FAMILIES, overly permissive parenting is often blamed for egregious misbehavior. Recent scandals have exposed some boards as too passive, too indulgent, or flat-out oblivious to what goes on around them. As a result, companies facing new governance requirements are scrambling to buttress financial reporting, overhaul board structures—whatever it takes to become compliant. If they stop there, though, compliant is all they’ll be. That would be a shame.

The key to better corporate governance lies in the working relationships between boards and managers, in the social dynamics of board interaction, and in the competence, integrity, and constructive involvement of individual directors. ...

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