Critical Success Factors for
D i•r e c t o r s m
" t h e E i g h t i es
Charles R. Ferguson and Roger Dickinson
14
Charles R. Ferguson is chairman and
CEO of LWFW, Inc. in Dallas. Roger
Dickinson is a professor of marketing at
the University o f Texas in Arlington and
the author of four books and numerous
articles.
Boards of directors have a unique and val-
uable tool for guiding their companies to-
ward success in the eighties.
usiness executives have been
B criticized for adopting
short-term strategies, having
little interest in quality control,
not competing internationally, not
increasing productivity, and the
like, b u t the board of directors has
remained relatively unscathed, at
least on these counts. The criti-
cisms which have been leveled at
corporate boards have usually been
concerned with the issue of cor-
porate governance or specific fail-
ures. Yet part of the blame, or
credit, for whatever condition U.S.
companies are in must be laid at
the door of those charged with the
ultimate responsibility for those
companies.
There are two major views of
the role the board of directors
should play. The most conservative
view is that the board is primarily
responsible for putting the best
possible manager at the head of the
company. The second view goes
further, and suggests that directors
should do whatever is necessary to
ensure that the company's manage-
ment direction and general well-
being are sound. The CEO would
take the initiative in charting a
course and setting things in mo-
tion, b u t the board would see that
the CEO's initiatives were sound,
and that major corporate risks
were avoided.
According to the second view,
all corporate failures, or near fail-
ures, in the U.S. can be laid at the
feet of the board; at Braniff, Penn
Central, Chrysler, Grant, U.S.
Steel, and other companies, the
board has taken the brunt of criti-
cism. Boards in other companies
react by self-consciously taking an
oath to be more vigilant in
watching performance and to be
wiser and more cautious in the
decision process. After every deba-
cle, more audit committees are
formed, more outside directors are
appointed, and more conferences
are scheduled on corporate gov-
ernance. However, few changes
take place. Fundamentally, the
dilemma of h o w the board should
function is still with us.
H o w can the board serve the
interests of the corporation with-
out getting into matters that
should be left in the hands of
managers? H o w can the board
make a positive contribution to the
corporation and not be merely the
last bulwark against disaster? The
Business Horizons ] May-June 1982