The Hot Seat: A Look at Corporate Directors' Changing Roles
The good news: a seat on a corporate board is still a prestigious—and often profitable—career milestone. The bad news: as a director today, your actions, responsibilities and liabilities are under the microscope. The rules and regulations have changed in recent years, as have expectations.
“When I was first invited to serve on a corporate board in 1984, it was a country club environment, where like-minded people of like backgrounds and like experience got together to nod favorably at what management was doing and encourage them to keep doing it,” says Admiral Bobby R. Inman, USN (Ret.), BBA ’50.
Inman is currently the lead director at Massey Energy and has served on numerous public and private boards. During those “country-club” days, most CEOs wanted feedback from boards only to reinforce their own thinking; attempts to offer direction on strategy were perceived as “intruding on the prerogatives of management,” notes Inman, who is on the faculty at the LBJ School of Public Affairs.
Fast-forward 25 years, and C-level executives like Lynn Utter, president and COO of Knoll North America, now look to their boards for exactly that type of guidance. “I view our directors as an excellent sounding board and source of counsel. Some of our most valuable board meetings occur when there is open discussion and debate,” says Utter, BBA ’84, who serves on the board of WESCO International.
Today, directors inhabit a dual position as both cheerleader and watchdog, helping to guide the health of companies, shape fiscal and corporate strategy, and, in the case of public companies, protect shareholder interest. Boards have become more diverse and more powerful; are more likely to consist of independent directors and contain more committees; and face more rules and regulations than ever before.
But with all these changes—and considering that board composition varies depending on the size of a company, whether it is public or private, and the industry it competes in—the basic essence of a director’s role remains largely straightforward.