Commonsense reform in board governance.

• Author: Popoff, Frank

The call for reform has come to the corporate boardroom just as it has become a major initiative for government, education, trade and a host of other economic, social and political agendas. Reform of board governance is an attention-grabbing topic since its proponents expect it to effect a broad range of issues -- from shareholder return to long-term strategy, and including executive compensation, management performance, and social concerns.

If Total Quality hasn't taught us that Continuous Improvement is mandatory in management, then our shareholders certainly will. Thus, demands for ever better board performance and governance are clearly justified. But the methods for improvement are proving to be controversial.

Since so much is at stake, any initiatives to reforming board performance should be thoughtful and fully responsive to the diverse needs of the many stakeholders. Some constituencies, including the media and the general public, usually opt for a less thoughtful and responsive adversarial approach -- it is more exciting and there is a popular theory that decisions hammered out on the anvil of public debate serve us best.

From the view of a chairman and CEO, knowing the corporation's destination, course, and speed should determine its distinct passage as it strives for improvement. Defining what improvements are needed are clearly our first order of business, but these are often corporation-specific. That is why I am not a proponent of the growing number of lists of rules and "dos and don'ts" specific to board policy and practice. No two boards or corporations are identical; the issues they face are deserving of their own priorities and solutions. While guidelines may prove helpful, they should be viewed in the context of the individual character of a specific board. Shareholders must demand no less.

Identifying the issues relevant to a company's board and its role in reaching corporate objectives will make for a considerable divergence in board agendas. Identifying general "best practices" for corporate boards without regard for specific needs and circumstances is absolutely counterproductive. And yet, this one-size-fits-all approach is receiving considerable support.

Perhaps it is because these lists often are generated as byproducts of highly visible and troubled enterprises and their boards. Other advocates of this cookie-cutter approach are investors with a special agenda not representative of the majority of shareholders. And...