Although only a small number of business leaders have been convicted of illegal business practices, all of Corporate America has been blemished by the splatter, and U.S. corporations must work hard to regain their stakeholders' respect and confidence. Most people hurt by corporate disasters have limited knowledge of how corporations are governed.
This book provides an insider perspective on major issues facing Corporate Boards. The corporate failures of the 21st century and the repercussions of these failures, including the Sarbanes-Oxley Act of 2002, have intensified focus on Corporate Governance. As the heightened awareness of, and interest in regulation begins to wane, directors must maintain a deliberate focus on compliance while demonstrating strong conviction for business success.
From the mid-1970s to the present moment, U.S. corporations have struggled to adapt to a globalizing economy, stunning technological improvements, and a reshaping of the corporate environment through mergers and acquisitions, downsizing, and re-engineering. With widespread political reforms afoot, the corporate Boards charged with directing and overseeing America's public corporations faced dramatic changes in their functioning, governance processes, and composition.
In the midst of this turmoil, the stakeholders of U.S. corporations, shareholders, employees, communities, and governments held corporate CEOs and directors increasingly responsible for corporate failures and successes. Many traditional Boards, filled with executives who served reciprocally on each other's Boards, seemed so complacent in their fiduciary oversight of corporations that they were considered mere rubber stamps for the wishes of CEOs.
When corporations performed poorly, pension and mutual funds blamed corporate directors for their reluctance to challenge poor management decisions that cost shareholders money. As these funds grew and held ever-larger blocks of shares, they forced corporate Boards to hear their complaints and, in many cases, to act on them. Eventually, the business press and government stepped in to help change the way corporations were governed.
As will be discussed throughout Compliance and Conviction, the rules and customs by which large U.S. public corporations are organized, financed, and governed have undergone intense scrutiny and changed substantially since the late 1990s. The challenges facing most Boards have become ideal launch pads for initiatives of a new, enlightened form of Corporate Governance in which corporate Boards take increasing responsibility for making sure that corporations are accountable to their shareholders, employees, communities, customers, and suppliers. Compliance and Conviction addresses some of the major issues facing corporate directors during the last 3 decades, a time of significant transition in Corporate Governance.
Reading Compliance and Conviction will be useful to anyone who wants an insider view of some of the major issues facing today's corporate boards and directors. Equally important, reading this book will benefit business leaders interested in creating agendas aimed at reforming Corporate Governance to meet the challenges of the coming era. Good Corporate Governance is no accident. It results from careful planning, implementation, coordination, and evaluation.
Like any other endeavor, its success depends on extreme personal leadership. When Boards leave governance structures to chance or complacently fail to change them, they risk becoming reactive bodies that do little except respond to situations as they arise. Effective governance procedures streamline board structures and eliminate processes that waste time, thus permitting the enlightened board to focus on monitoring trends and planning corporate strategy and executive succession, three activities central to keeping a company nimble in today's ever-changing market. The corporate failures of the first decade of the 21st century and the repercussions of these failures, including the Sarbanes-Oxley Act of 2002, certainly have intensified focus on Corporate Governance.
Unfortunately, like for most calls to action, fear was the primary driver, and both stakeholders and corporations sought compliance with the new regulations designed to restore confidence to shareholders. Now that the trepidation has subsided and the financial performances of Corporate America again have reached a reasonably steady state of appreciation, corporate stakeholders are likely to turn their attention to other, more pressing, issues. Many great achievements have flowed from accidental breakthroughs, and many others have been motivated by some kind of fear. Good Corporate Governance, however, should not be left to chance.
Serendipity is a poor surrogate for strategy and never should be considered a foundation for building long-term shareholder value. Nor should Corporate Governance be driven by fear. In Compliance and Conviction, I suggest that corporate Boards use enlightened Corporate Governance as a touchstone for delivering sustainable long-term shareholder value. Corporate directors must remain vigilant in the pursuit of increasing long-term shareholder value and stakeholder appreciation.
As the heightened awareness of, and interest in, the Sarbanes-Oxley Act of 2002 begins to wane, corporate Boards must strive to maintain a deliberate focus on compliance and demonstrate a strong conviction for business success. We all have a vested interest in the continued evolution of the governance of the American corporation.
Extreme personal leadership is the foundation of Enlightened Corporate Governance®. This book encourages directors to use extreme personal leadership as the touchstone for delivering sustainable long-term shareholder value.
We all have a vested interest in the continued evolution of the Governance of American Corporations.