Management Reset: Organizing for Sustainable Effectiveness

Chapter 5. Board Governance

All too often, today's corporate boards perform poorly. A close look at them suggests that most are ill-prepared to govern complex organizations.^[30] They failed to prevent Lehman Brothers and other financial institutions from making risky decisions that led to their bankruptcies and government bailouts. At Lehman the risk committee of the board met just twice a year during the two years before the company went bankrupt as a result of its high-risk failed investments.

In the cases of Enron and Tyco, illegal activities were overlooked or not detected by the board before they went bankrupt. The board of BP has consistently failed to deal with its poor safety record and now faces decades-long litigation and reputation damage ...