The director's dilemma: it is hard to know when simply raising questions, and eyebrows, has become insufficient.

• Author: Bowen, William G.
• Position: ENDNOTE - Reprint

IN HIS REPORT on the problems at WorldCom, Richard Breeden observed, "Perhaps more than speeches from lawyers, every board can use a curmudgeon or two" (my emphasis). He went on to note," Someone on the board has to be prepared to object if management does not observe the rules of good behavior, if management seeks excessive compensation, or if management is creating unacceptable risks." Others have stressed the value of having a "pilot fish" on the board, who is unafraid to swim upstream.

I remember well how much I benefited, when I was president of Princeton, from having to respond to pointed questions from independent-minded trustees such as Michael Blumenthal and Paul Volcker about the cost structure of the university and tuition policies. It is critically important, however, to have the right kind of curmudgeon.

Both Blumenthal and Volcker were strongly supportive of the university, and of its leadership, at the same time that they vigorously debated the wisdom of one decision or another. In the words of the late John Gardner, distinguished public servant and former head of Common Cause, institutions need to be spared both "uncritical lovers and unloving critics." Collegiality and mutual respect cannot be sacrificed in order to include questioning, if not dissenting, voices in the conversation.

Let me now advance one other proposition in which I have come to believe strongly: In the corporate world in particular, courage and the will to act are often the attributes in scarcest supply. In my experience, after some amount of time and discussion (to be sure, frequently too much time and too much discussion), it usually becomes fairly obvious what should be done. The trick is marshalling the energy, and especially the courage, to act. It is so much easier simply to wait a little longer for events to unfold.

Unfortunately, the problem is deeper than merely finding the individuals with the requisite backbone--though that is, I suspect, the most important thing. The less tractable aspect of the problem reflects what one experienced board member has described as the "director's dilemma":

"Executive management must be left free to run the company uninhibited by excessive interference by the board. The issue, of course, is what is excessive interference? I find that most conscientious directors are overly shy about being perceived as rocking the boat. This leads to a broader question. Can directors be more than a purely reactive force? The...