Directors: 'the brokers of balance.'

• Author: Campbell, Robert H.

Editor's Note: At each semiannual meeting of the Wharton/Spencer Stuart Directors' Institute, a dinner is held in which a major address on corporate governance is given by a business leader. Taking his turn at the podium for the June 1996 Directors' Institute gathering of senior executives and directors was Robert H. Campbell of Sun Co., one of the country's largest petroleum refiners and marketers. Campbell began his career at Sun in 1960 as a research engineer at the company's Marcus Hook, Pa., refinery. He was named President and CEO in 1991 and Chairman in 1992. His directorships include Cigna Corp. and Hershey Foods Corp.

There was a time when being a member of a board was almost an honorary position, sort of like being a husband, or a first-base coach. The demands on you were minimal. You had to have a clean suit, reasonably straight teeth, and a copy of the Wall Street Journal (not necessarily today's edition). It also helped if you were living proof that charisma can be cured if you catch it early enough. That protective profile of a director is no longer applicable.

Whether it is the emergence of the Wall Street money manager's short-term appetite, or the regularly scheduled "election-year search" for someone to demonize, or the media attention some CEOs have earned by downsizing their workforce while upsizing their own pay - whatever it is, members of boards and corporate executives are increasingly under the glare of the hot lights, and rightly so. Some of what's going on surfaces legitimate questions about issues of fairness, and a corporation's priorities.

The net effect is:

* Your director's mail is heavier and more militant.

* The annual meetings are much more lively and unpredictable.

* And the responsibilities and the risks are higher.

More directors now find themselves uttering the phrase: "Do I really need this?"

Before I unintentionally paint us all into a corner on this subject, let me remind you of the other side of the coin - that the opportunity to serve on a board of directors is a distinct honor, and it has lost none of its nobility of purpose.

Two centuries ago, in 1791, Alexander Hamilton established the first American corporation. He had an admirable entrepreneurial vision. He felt his enterprise could profitably manufacture paper, linen, women's shoes, brass, ironware, and carpets - an impressive array of conglomerate-type products. His corporation was guided by a very up-to-date sounding statement of purpose. It said: "The affairs of the company are to be under the management of thirteen directors."

The Hamiltonian mandate was that members of the board of directors were to manage and control the affairs of the corporation. The role of the board was clearly defined - at least on paper. Unfortunately, the company lasted only five years. It fell apart, history tells us, partly because "the workers were incompetent and the managers lacked skill." That combination will slow you down every time.

Interestingly enough, the main reason cited for the failure of Hamilton's enterprise was that the directors "failed to involve themselves in the affairs of the company." Hamilton's post-game analysis was that "directors must be loyal and competent and imbued with a special faith. But above all, must have an enlightened self-interest."

What is refreshing about reviewing that checkpoint in history is to discover that what was important then is still pretty much in place today.

* Directors still have to make sure there is a well understood and communicated strategic direction for the company.

* They still have to make sure there is a qualified management team and structure in place to execute the business plan and achieve the strategic objectives.

* And they still have to make certain that the machinery is in place to maintain the corporation's integrity, reputation, and position of balance among its various stakeholders.

So, if what was true 200 years ago is still true today, then what has changed? For openers:

* What's changed is the visibility - it's one thing to hit a bucket of practice balls on the driving range, and quite another to tee-it-up on national TV at the U.S. Open.

* What's changed is the level of expectations from investors, employees, communities, suppliers, and customers.

* What's changed is the prominence of government - perhaps not so much the role of government but its need to be more responsive to a better informed electorate.

* What's changed is the role of the media - which positively revel in the identification of any perceived injustice or inequity.

* And what's changed is corporate ownership - once a province of the few, now a sport played by many millions of Americans.

When those of us in positions of leadership remark about the way things "ought to be," we are fond of pointing out that the overriding challenge facing management and directors today is to guide the corporation so that there is an...