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What Directors Think: Directors' Role in Setting Strategy

from Fourth Quarter 2010
Corporate Board Member
Interviews by Charlie Deitch, Jennifer Doll, Lisa Ferri, Randy Myers, and Daniel Weiss

Is your board more involved in setting strategy than it was a year ago? If there’s been improvement in that respect, would you like even more involvement?

We’re much more involved than a few years ago. In the past we’d talk about strategy, but it always seemed that by the end of the meeting we were out of time and it didn’t get enough attention. So we decided to put it at the beginning of the meeting, or to start talking about it at dinner the evening before the board meeting. In addition, each of the board members now has a business unit he’s mentoring, so that we become more involved in that particular business and can summarize for the board what is happening in each of our major segments. We’ve gotten away from the old once-a-year dog-and-pony show where you just get mind-numbing slides that don’t give you enough time to interact with the people. I feel pretty comfortable with our involvement in strategy planning now.
Robert L. Smialek, 66
Consultant and Private Investor, Dublin, Ohio
General Cable Corp.

The answer is yes. We all recognize as a board that it’s very difficult to predict both the economy and the pace at which changes occur. We’re probably 50% more involved than we were; we’ve done this by putting together special committees that look at strategic issues, and this didn’t exist a year ago. Of course, you need to keep your nose in and fingers out. I’ve been on eight different public-company boards, and the best ones realize that the job is governance, not management. You should be a great resource to the management team, but you can’t cross the line and start to manage.
John F. Osborne, 66
President, Competitive Customer Support Inc., Twin Bridges, Montana
Amkor Technology Inc.

Schweitzer is a specialty paper company, and that industry is changing rapidly. They make the paper used in cigarettes. As cigarette consumption drops, there’s a need to revisit what the company is all about and the direction we’re moving in. So we’ve been spending a lot of time focusing on the future from a strategic point of view. I think we’ve got a pretty good process in place now, but if you’d asked me two years ago, I would have said I’d like to see more involvement in strategy. That’s when we spoke up and upped our involvement. We devote three days, solid days, over the course of the year to just strategy.
Robert F. McCullough, 68
Retired Senior Partner, Amvescap PLC, London
Acuity Brands, Primerica Inc., Schweitzer-Mauduit International

Our board has been increasingly involved in setting strategy. As the board has evolved from one dominated by insiders to one totally composed of independent directors except for the CEO, the involvement in strategic planning has greatly increased. Strategic directions are now fully debated, and performance related to strategic objectives is systematically evaluated. We have a productive and open dialogue on these issues.
R. Charles Moyer, 65
Dean, University of Louisville College of Business, Louisville, Kentucky
King Pharmaceuticals

On both the boards I currently serve on, we have a high level of board involvement in strategic planning. Typically our strategy review is divided into a detailed review of each strategic business unit, followed by a review of the corporate portfolio. I find the discussions to be thoughtful and beneficial. In the end it’s the role of management to devise a strategy that makes sense for long-term shareholder benefit, but the board can play an important role in evaluating the risk-reward ratio as well as provide a foil for constructive debate.
Gregory F. Milzcik, 51
CEO and Board Member, Barnes Group, Bristol, Connecticut
Idex Corp.

The role of a board is not to set strategy; it’s to make sure that management has a strategy which they approve of and then monitor it over time. We don’t go into the room and say, “Management, do this!” But we’re examining strategies more carefully and more frequently, and we’re making sure we’re in agreement with the direction management is going. Companies that are surviving are becoming better run and more focused.
Giles H. Bateman, 65
Private Investor, San Diego
Life Time Fitness Inc., WD-40 Co.

At Sun we have a meeting once a year to talk about strategy. In general, at most boards too much time is spent looking at the rearview mirror and not enough is spent looking through the headlights. It’s more challenging to look through headlights. That’s where all the action is.
Milton J. Walters, 68
President, Tri-River Capital,
New York City
Frederick’s of Hollywood Group, Sun Healthcare Group

topic tags: board of directors, corporate governance

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