Corporate Boards That Create Value.

• Author: Levin, Douglas
• Position: Book Review

By John Carver with Caroline Oliver Published by Jossey-Bass, San Francisco, 201 pages, $27.95

ALPHONSO THE LEARNED, the oft-quoted 13th century Spanish king, once said, Had I been present at the creation I would have given some useful hints for the better ordering of the universe."

Those whose ambitions are more economic than theological may still benefit from the creationist ideas offered by John Carver and Caroline Oliver in Corporate Boards That Create Value: Governing Company Performance from the Boardroom. This book occasionally comes across as doctrinaire and predates key developments in the business and board worlds (notably Sarbanes-Oxley, new rules at the NYSE and Nasdaq, and the options accounting debate, among other recent developments). But the book offers many valuable insights, an extensive review of basic board responsibilities, and sensible policy recommendations that universally apply to effective governance of small and large companies.

Carver and Oliver, both veteran consultants to boards, present a comprehensive set of policies, prescriptions, and perspectives in the form of a "policy governance" model that, if followed, is certain to deliver boards, chairs, CEOs, and management teams to the promised land of great governance.

The book delineates the tasks of the board, CEO, and senior management in very fundamental terms, ever mindful that the role of the board is to lead on behalf of the owners. Carver and Oliver advise that a chief governance officer (CGO) should chair the board. They make an irresistible case--especially in a three-page appendix dedicated to the subject--for the CGO as the cohesive force throughout the policy governance model. Carver and Oliver also meticulously explore the roles of the chair and CEO in the policy governance model (devoting a separate five-page appendix to this analysis). Finally, the authors give inside directors special notice, arguing that managers should manage and not be directors.

The model begins by defining the board's various responsibilities and goes on to explain how group leadership dynamics can be put to good use. But they don't always account for personal chemistry, the great wild card of effective functioning. Then the authors integrate management players, especially pesky CEOs who need to follow board-CEO delegation principles. For a world gone mad during the exuberant stock market period during the late 1990s and the year 2000, this is a poignant reminder of how...