Directors Roster.

AuthorPorter, Martin D.
PositionBrief Article

In affiliation with Spencer Stuart -- quarterly record of new director appointments

AS EXECUTIVES prepare to join a board, many wonder what role they will have in the company's strategic planning process. Three of the 230 directors joining boards in this edition's Directors Roster affirm that working together with management, boards play a uniquely instrumental role in formulating corporate strategy. These directors believe that while management has overall responsibility for developing and executing corporate strategy, boards should provide management with substantive feedback, challenge the efficacy of their plans, and monitor the performance of their initiatives.

Joining the board of National Data Corp. is James F. McDonald, president and CEO of Scientific-Atlanta Inc. "Management's job is to develop corporate strategy and communicate it to the board," he says. Correspondingly, McDonald believes the board's role is "to engage management on how well-thought-out their plans are."

A board must have a role in a company's strategic development, believes McDonald, by virtue of its obligation to shareholders. He says boards must always address the question, "How good a job is management doing at rewarding shareholders?" Management's track record, he says, is one indication.

"If you've got a group of guys who are hitting home runs all the time," he says, "it's hard to argue with them about their strategy. Chances are there will be times when you might say, 'I may not agree with you, but we're going to bet on you anyway.'" Using General Electric Co. CEO Jack Welch as an example, he surmises that any director on his board "wouldn't dare tell him, 'I think your strategy is all wrong' -- no matter what you think."

"It's both important and appropriate for the board to be involved in formulating corporate strategy," says Brady Corp. CEO Katherine Hudson, who joins the board of Charming Shoppes Inc.

A board should be "a sounding board" for management, she says, and should "continually challenge management with strategical alternatives to their creative ideas," adding that "As a CEO, I would not want my board disconnected from what's going on with corporate strategy." She claims she "has no trouble dealing with differences of...

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