Books Directors Should Read
from Winter 1998
by Laura Washington
Be warned: One of the hottest books old-hand directors think new directors should read can be tough to find. First, there’s a language barrier. Some bookstore clerks proved unable to find a single listing for “Prawns or Filotapes.” One looked in vain for “Porno Potentates.” Try looking for the book under its right title, Pawns or Potentates, and the search isn’t much easier. The original McGraw-Hill version may pop up as out of print, but persevere. Harvard Business School Press now puts out the same book, at $29.95. It’s still elusive in bookstores, but you can order one via Amazon.com and other websites.
Warren Batts, retired chairman and CEO of Premark International, a director of Allstate, Sears Roebuck, Sprint, and Cooper Industries, and a big fan of the book, says he keeps his copy on the table by his bed. He also uses the work as the textbook for the corporate governance course he’s teaching at the University of Chicago Graduate School of Business.
Batts says authors Jay W. Lorsch and Elizabeth MacIver provide “a good qualitative and statistical examination of what the board does under different conditions”—including instances when directors oppose management. Another fan is former Secretary of Labor Ann McLaughlin, a director of American Airlines’ parent AMR, General Motors, Kellogg, and Donna Karan International.
Other reading recommendations include William G. Bowen’s Inside the Boardroom: Governance by Directors & Trustees (John Wiley & Sons, 1994; $39.95). Its admirers include Elizabeth Bailey, professor of public policy and management at Wharton and a director of Honeywell, Philip Morris, TIAA-CREF, and CSX, and Bruce Ellig, who sits on the board at Headway Corporate Resources. Says he: “This is great for beginners who need an overview of dos and don’ts and explanations of what a director’s role really is.”
Bailey also suggests fellow Wharton professor Michael Useem’s Investor Capitalism (BasicBooks, 1996; $30). It shows how mutual funds and other institutional owners are changing the way businesses are run. For more experienced directors, Ellig finds general works such as The Leadership Engine: How Winning Companies Build Leaders at Every Level (Harperbusiness, 1997; $27) by Noel M. Tichy and Eli B. Cohen helpful.
McLaughlin makes the point that directors need to have a sophisticated grasp of management issues. “One of the board’s biggest responsibilities is hiring and firing the CEO,” she says. “How can you do that if you don’t understand management?” Her reading recommend-ation on this subject is another book by Useem: The Leadership Moment: Nine True Stories of Triumph and Disaster and Their Lessons for Us All (Random House, 1998; $25).
Biographies and autobiographies are instructive, too, especially those with a business thrust. Batts, for example, is engaged in (and by) two such tomes: Roger Lowenstein’s Buffett: The Making of an American Capitalist, a biography of America’s second-richest man, and Fighting the Flying Circus, by Edward Rickenbacker, the World War I ace who went on to build Eastern Airlines. Bailey is enmeshed in Two Lucky People, a memoir by economist Milton Friedman and his wife, Rose.
But given the woes of corporate governance, directors should—and do—cut themselves some slack. All heavy reading makes Jack a dull director. Tom Clancy and John Grisham are especially popular at 35,000 feet.
