Chapter Eleven. Best Practices in Corporate Boardroom Leadership

Jay A. Conger

Historically, leadership within corporate boards has been a lopsided affair. The chief executive officer (CEO) of the company is often the de facto leader of the board. Board directors rarely assume active leadership roles. They prefer instead to play the role of advisers. When acts of director leadership do appear, they are typically late—for example, when an organization is deep into a crisis. As a result, board members relinquish their leadership role as overseers of both the CEO and the corporation.

Few boards in recent history exemplify the failure of director leadership more than did the corporate board of Enron. On the one hand, the nonexecutive directors comprised a group of sophisticated individuals who could potentially have unraveled the company’s complicated and unethical financial dealings. They included a Stanford accounting professor, an economist, a global financier, a former national financial regulator, and prominent former CEOs. They could have forced an earlier and more public examination of Enron’s accounting and finance practices. Instead, they suspended the company’s ethics code to engage in controversial partnerships and financial arrangements at the prompting of company officials and external advisors. The directors themselves appeared not to have understood the full consequences of their decisions around the off-balance-sheet deals that inflated the company’s earnings ...

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