Hewlett-Packard has announced that Lawrence Babbio will be
stepping off its board, and this comes hot on the heels of the news that Sari
Baldauf would also not be standing for re-election.
GlaxoSmithKline Pharmaceuticals has announced that James
Murdoch will not continue to serve on its board.
He has served on GSK’s board since 2009, on its Ethics
Committee. Murdoch has been embroiled in controversy this year, which led to
loud rumblings as to whether it was prudent for him to remain on the board.
This news brings to mind an issue that comes up time and
again when independent board directors gather: inactive, unproductive,
distracting or simply “dead wood” board members.
It is often discussed in hushed tones, but it is time to
address it openly and frankly, and to look upon it as the responsibility of
each of us as individual board members, rather than simply an issue for the
board or the board chair to tackle.
There are a number of reasons that you should consider
stepping off a board:
There is a finite amount of time that anyone can serve on a
board in a truly independent manner, yet a surprising number of “independent”
directors have served for 30-plus years.
The UK Corporate Governance Code's guideline on this issue
sets out nine years as best practice. It seems hard to fathom that independence
would stretch to 36 years, the tenure of Coca-Cola board director James D.
Robinson, or 41 years, as is the case with Douglas G. Houser, a director on
Nike’s board.
Questioning their length of service is not a reflection on
their abilities as board members, but rather stating the obvious: It is
impossible to remain independent and to serve for that long.
- Your expertise is no longer required.
Flux is an integral part of business. Innovative companies
shift their priorities and direction routinely, in large and small ways.
The object is to have people around the table who reflect
the expertise needed for today and tomorrow. As the business changes direction,
it may be that the reason you were brought onto the board no longer exists.
It is not personal, and it can be awkward to say, but if
this is the case, recognise the change and make room for someone else whose
expertise is a better fit.
- You’re not pulling your weight.
No one joins a board with the intention of going along for a
ride. Work and personal circumstances change, and sometimes interest simply
wanes.
If you find you are missing board meetings or committee
meetings, or are not engaging in, let alone beyond, what you are duty-bound or
required to do, it is time to look again.
If you are “phoning it in” by attending meetings but not
reading your board papers fully or are not participating in the meetings you do
attend, you can guess that everyone around the table has noticed.
Be honest with yourself and exit gracefully.
- You’re obstructively disruptive.
I am a strong proponent of healthy creative tension. It is
vital to ask hard questions and to be confident about stepping up and taking an
active interest in the discussion.
However, there is a line. Your behavior should not be a
distraction or deliberately combative. It is one thing to have creative
tension; it is another to have an all-out war.
If discussions become ego-driven, if your contributions are
based on concern for your reputation, and if the best interests of the
organisation and its stakeholders you are there to serve and protect take second
place behind that, you have outlived your usefulness to the company.
- Your actions, inside or outside the boardroom, bring
distraction or disrepute.
We’ve seen a couple of cases of board directors behaving in
a way that taints everything in which they are involved. This runs the gamut
from insider trading to saying things in public that are ill-advised or
off-colour.
It could also mean being strongly associated with
unfortunate decisions made by the board you sit on. If your personal or
business actions are bringing disrepute to the company, if you have become the
story and thus a distraction for the company, do the decent thing for the sake
of the company and step off in short order.
No one wants to be the person everyone around the table
feels is not contributing, and you never want anyone else to have to tell you
that you have outstayed your welcome.
Even worse, you don’t want to be the subject of shareholder
activism about whom the things that are said ring true.
Although humbling to admit, no one is irreplaceable, and the
best service you can give is to step down and help encourage board refreshment.
There are several mechanisms that can be put into place to
make this process easier for boards to deal with, including term limits, clear
job descriptions and regular board evaluations; but really, it shouldn’t take
that for directors to figure out the right thing to do - and do it.
When it is time to go, don’t leave it too long, don’t wait
to be pushed, step off gracefully, and finally, don’t try to “manage from the
grave.” - Reuters
(Lucy P. Marcus is CEO of Marcus Venture Consulting. She is
Professor of Leadership & Governance at IE Business School and she speaks
and writes about boards and leadership.)