Governance Book of the Year: Boards That Excel by B. Joseph White: what it means to get the CEO selection decision right.

• Position: ENDNOTE

Ed. Note: A tradition in the Governance Year in Review issue of Directors & Boards is the selection of a Governance Book of the Year. Honoree for 2014 is Boards That Excel: Candid Insights and Practical Advice for Directors by B. Joseph White. Dr. White has a distinguished resume: he chairs the corporate governance committee of Equity Residential, an S&P 500 company; he is a director of one of America's largest private companies, Gordon Food Service; he is an academic leader with the University of Illinois, where he is the James F. Towey Professor of Business and Leadership and president emeritus, and is also dean and professor emeritus at the Ross School of Business at the University of Michigan; and he is an experienced nonprofit board member and chairman. He was a keynote speaker at the 2014 Private Company Governance Summit (PCGS), produced by Directors & Boards, and he returned as a key speaker on "Boards and Strategy" at the 2015 PCGS. Boards That Excel was published in August 2014 by Berrett-Koehler Publishers (www. bkconnection. com). This excerpt is printed with permission of the publisher.

A board's most important responsibility is to appoint the organizations' chief executive officer. This decision, more than any other, will affect the success of the enterprise and reflect on the judgment of the board.

When the board gets the CEO appointment right, being a director is a pleasure. Things will go as well as they possibly can, no matter how difficult the environment or challenging the problems. When it's wrong, there is hell to pay. Performance will suffer. Policy differences will emerge between the CEO and the board. Directors will likely divide over those who support the CEO and think he or she deserves more time and those who believe new leadership is essential, the sooner the better. By the time the dust settles and the board agrees to make a change, costly months or years will have passed. Fingers crossed, the board will try all over again to find the right leader.

What does it mean to get it right when it comes to appointing a CEO?

The new leader must:

* Be right for the situation, that is, have the smarts to develop a good game plan and the skills to execute it successfully;

* Be accepted by the organization so authority conferred by the board translates into effective leadership; and

* Stay long enough to achieve critical goals and set the stage for smooth succession.

I watched with pleasure the appointment of my classmate...