'Let sleeping directors lie.'(excerpts from 'Further Up the Organization')

• Author: Townsend, Robert

Another well-known executive during the 1960s and 70s era passed away recently. Robert Townsend, who headed Avis Rent-A-Car-from 1962-1965 and was affiliated with a number of other companies and organizations over his career, died in January 1998 at the age of 77. (In an interesting then-and-now twist, the Townsend-revitalized Avis was sold to the Geneen-run ITT Corp. in 1965.) In 1970, Townsend wrote Up the Organization, an irreverent and inspirational book. Subtitled How To Stop Management from Stifling People and Strangling Productivity, the book instantly became and remains a classic text on management methodology. Indeed, last year it was selected for inclusion in the book, The Ultimate Business Library: 50 Books that Shaped Management Thinking (published by AMACOM). Townsend revised his book in 1984, calling it Further Up the Organization, from which the following observations on boards of directors are taken.

Most big companies have turned their boards of directors into non-boards. The chief executive has put his back-seat drivers to steep.

This achievement has to be understood to be admired. In the years that I've spent on various boards I've never heard a single suggestion from a director (made as a director at a board meeting) that produced any result at all.

While ostensibly the seat of all power and responsibility, directors are usually the friends of the chief executive put there to keep him safely in office. They meet once a month, gaze at the financial window dressing (never at the operating figures by which managers run the business), listen to the chief and his team talk superficially about the state of the operation, ask a couple of dutiful questions, make token suggestions (courteously recorded and subsequently ignored), and adjourn until the next month.

Over their doodles around the table, alert directors spend their time in silent worry about their personal obligations and liabilities in a business they can't know enough about to understand. The danger is that their consciences, or fears, may inspire them now and then to dabble, all in the name of responsibility.

Two simple tactics have been devised and time-tested in large organizations to head off this threat.

First, make sure that the board is composed partly of outsiders and partly of officers. Since all of the important questions relate to the performance of key men and their divisions, no important questions will be asked. To do so would be a breach of etiquette...