The gritty stuff: heard this in your governance seminars?

• Author: Sutton, Gary
• Position: Viewpoint essay

I'VE SUCCESSFULLY SAT through several seminars for board members, and actually stayed awake through most. My public companies earned ISS points for my attendance (yeah, team). None of these seminars touched on the gritty stuff that makes a board work.

Here's what makes them not work:

1. Too Much Diversity: Getting an Asian, a woman, a professor, and other windowdressing board members slows down meetings--unless each has been a CEO. How can you advise if you've never experienced the relentless pressure of improving cash flow and earnings quarter after quarter? How about an Indian, a handicapped person, and a professor with that P&L background? Super! Recruit them. Just know that they're already highly sought after as board members, and should be.

2. Dinner Before the Meeting: This common social gathering serves little purpose. Have a dinner after the meeting. Then you can leisurely dig into issues that arose during the day. Dinner before requires holding back some information; otherwise, why have the meeting? Boards are about business, not being pals.

3. Blurring Committee Lines: Committees make the business go smoother, with more focus on key issues without taking up the entire board's time. A couple years ago, nobody wanted to get near the audit committee. Liabilities. No blurring problem then. Today, nobody wants to be on the comp committee. Liabilities. But salaries are more fascinating to everybody, and other directors tend to butt in too early or fail to leave the room when comp committees meet. Blur, blur.

4. Red-Lining 10-Qs: This is a common courtesy the auditing firm or legal does for the comp committee. Makes reading easier. Concentrates the committee on changes. Sounds good. But businesses change, and the drudgery of rereading old text is important since some of those historical statements have become obsolete.

5. Mismatching Size: Knowing how a small business operates and knowing how a big business operates is far more important than industry knowledge. Hiring that VP from MegaCorp Holdings for a board seat at Corner Grocery results in hiring a consultant to tell the grocer how to stack apples, installing an SAP system to better manage the business, and drafting HR policies...