By Justin Fox – Here’s a subversive suggestion. Maybe boards are never going to be any good at keeping executives from betraying shareholders, messing up corporations and breaking laws. We should just accept that, stop beating boards up for it and move on.
What are board members good for? Well, according to Steven Boivie, Michael K. Bednar, Ruth V. Aguilera and Joel L. Andrus, they provide “access to resources like advice, counsel, knowledge of external events and/or influence with external stakeholders.”
They also play a crucial decision-making role during “punctuated events” — crises, basically — such as management transitions, accounting scandals and “other internal and external shocks that increase the uncertainty in which a firm operates.”
The board-as-monitor view is part of an intellectual framework descended from a 1976 paper by economists Michael Jensen and William Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” The gist is that executives are agents acting on behalf of a corporation’s owners, and the central challenge of the corporation is getting those agents to do their duty. more> http://goo.gl/O8APgN
- Rating the Employee Review: Needs Improvement, Stephen Mihm, Bloomberg