12 STEPS TO A BETTER BOARD

It’s a fact: Too many corporate executives sit on too many boards. It’s an addiction of sorts once they get in the habit of helping out old friends, each new board seat is another feather in their corporate caps. And if one gets hooked on board compensation and perks, it’s hard to quit.

But some companies and CEOs complain that they can’t recruit enough qualified directors; they’re “forced” to rely on friends and other known executives to support their strategic agendas. Too often, their corporate colleagues happily accommodate them.

So, it may be time to consider a “Betty Ford Clinic for Boardaholics” and re-engineer the paradigm. If you’re a board member or CEO who might need to take the cure, or a board chairman who recognizes it’s time for a change in your board’s mix, number or focus, consider these 12 steps:

If you are currently a CEO,take on no more than two outside board memberships.

About two years before retirement, think about adding two more boards to your portfolio. It’s a nice way to ease out of your company, pass the baton to your successor and keep busy.

Under most circumstances, the board should discourage the retired/retiring CEO from continuing as a director.

Make sure the chairman of the board is always an outside director.

Boards should have no more than nine outside directors. Smaller boards mean greater member participation.

“Professional” board members should serve on no more than six boards.

Police yourself before the government decides to mandate outside directors’ terms of service and number of boards.

Require all board members to purchase stock in the company, and pay them in stock. Equity breeds committed involvement.

Look beyond the known few to the many well-qualified chief operating officers, minorities and women, for instance, who would add a fresh perspective to almost any board.

Don’t keep increasing board benefits board members aren’t employees.

Eliminate company employees as directors, but create rotating
“associate directorships” to give senior officers productive exposure. Texas Instruments Inc. successfully began this practice several years ago.

Establish specific evaluation criteria for board member performance, as well as for board composition and selection. Create a plan and implement it.

No doubt, the cure will be tough for some directors and companies. But they and their boards will be huge beneficiaries. Firms will wind up with smaller, more independent and diligent boards, and happier shareholders.

Frederick Wackerle is a Chicago-based

executive search consultant focusing on CEO succession and board searches. He also

provides management succession counsel to boards and CEOs.