“Where was the board?” It’s a question we hear whenever something – anything – goes wrong at a public company. The question has been asked in all sorts of circumstances, ranging from failing jet systems, to networks being hacked, to harassment allegations, and so on.
Don’t get me wrong – there are most assuredly cases in which the question needs to be asked. Without naming names, there have been numerous instances where it seems apparent (and in some cases has been proven) that the board elected not to see or hear evil and thus hadn’t a clue that there was a problem, and other cases where the board created or fostered a rotten culture that seemed to beg for problems. However, what concerns me is that society at large seems to think that the board is or should be responsible for every sin of commission or omission by the company. And that just seems wrong.
Boards are charged with oversight. And while the definition of that word can be difficult to pin down, it seems clear that the board was never supposed to be a guarantor. Yet that’s precisely where we are headed – or perhaps where we’ve arrived. You even see it in articles and treatises by governance nerds who should know better: “The board should ensure that…”. Boards cannot “ensure” anything. They are part-time consultants, and even the best boards cannot possibly know everything that a company does.
As a result, we’ve seen an upswing in suggestions as to how to help boards, including the following: