Director motivation is not the real issue.

• Author: Levy, Leslie
• Position: Corporate directors - Response to Hoffer Kaback, Directors & Boards, Winter 1996

Mr. Kaback complains that the NACD report on director compensation, while conceding that directors are professionals, treats them differently from physicians, lawyers, engineers, architects, and accountants. Both Mr. Kaback and the NACD report are wrong. Directors are not professionals!

What are the defining characteristics of a profession? To the solution of client problems, professionals apply knowledge, attitudes, and skills acquired through training specific to that profession. Examinations determine that professionals' possession of such knowledge, attitudes, and skills meets standards established by the profession's governing body. Professionals who pass the examinations and promise to obey the profession's rules are certified by that body. Professionals who break that promise can be expelled from the profession.

These characteristics of professionals do not apply to directors, which is why every effort to establish board membership as a profession and to develop generally accepted guidelines for directors has failed. There are fundamental reasons why even the most experienced, able individuals have not succeeded in defining the knowledge, attitudes, and skills of a director in a satisfactory manner.

The most important of these reasons is that directors, unlike most professionals performing in their professional capacity, are responsible for making strategic decisions. True, some boards add value without getting involved in strategy - for example, the directors of a small company who, by merely lending their names as directors, help it to grow. (One might, of course, argue that these directors could add still more value if they did get involved in strategy, but that is not the issue here.) And some professionals, such as judges who establish precedent, make strategic decisions. However, strategic problem-solving is an essential (perhaps the quintessential) role of at least some, and perhaps many or even all, boards. The same is untrue of professionals.

Whereas the knowledge, attitudes, and skills required of professionals are defined and redefined in ever-increasing detail, those required for strategic problemsolving at board level are never successfully specified, except at a level too abstract and general to guide directors in solving strategic problems. For example, consider the challenge to experienced, knowledgeable directors who must decide whether to introduce a particular new product line at a given time and place by means of...