At the 2000 Chicago Spencer Stuart Directors' College, John Bryan, chairman of Sara Lee Corp., and Jim Drury, vice chairman, Americas, of Spencer Stuart, discussed their experiences with boards and how those experiences have changed over time.
JOHN H. BRYAN has been at the helm of Sara Lee for more than 25 years, leading the company in establishing some of the world's most recognized brands, including Sara Lee, Hanes, Playtex, Douwe Egberts, L'eggs, and Kiwi. John has also been a pillar of Chicago's civic and cultural community, spearheading a $100 million fundraising campaign to renovate Chicago's Orchestra Hall and its Lyric Opera House, and is presently chairing a private development project to build Millennium Park on Chicago's lakefront. He is also chairman of the board of trustees of the Art Institute of Chicago and serves on the boards of General Motors, Goldman Sachs, Bank One, BP Amoco, SL/DE board of supervisors (The Netherlands), and, of course, Sara Lee.
James J. Drury founded the Chicago/Spencer Stuart Directors' College with the University of Chicago Graduate School of Business. He chairs its advisory board and is a recognized authority on board development and recruiting strategies. With more than 20 years of executive search experience, Jim has secured directors for many corporations ranging from H.J. Heinz to United Airlines to Baxter International.
Additionally, as co-founder of "Toward Common Ground," a successful corporate governance series at Northwestern University's Kellogg Graduate School of Management, Jim has been an active participant in the evolution of board governance and best practices, as well as in the implementation of board evaluation processes.
Jim Drury: John, please start by giving us some perspective on your varied board experiences.
John Bryan: I have a long history in several capacities at the boardroom table -- from being a director to managing a board of directors. My training as a board director began when I was only 23 years old -- when I became a director of a national bank in my hometown -- and it has continued without a break since then. And I began actively managing Sara Lee's board of directors in 1975. I've also had the opportunity to serve on Continental European and British boards.
Drury: John, what's the key realization you've gleaned from your wide-ranging board roles? When we've spoken in the past, you've mentioned the importance of distinguishing between managing and governing.
Bryan: Having been from management and on the side of the board, I've developed a very acute sense of the difference between managing and governing. As an outside board member, I try very hard to determine when I'm governing and when I'm trying to manage. And as a CEO, I observed times when our board members were trying to manage when they should have been governing. It sounds simple, but directors have traditionally had a very hard time separating the two functions.
The essential role
Drury: What do you see as the main difference between governing and managing?
Bryan: It's really a matter of deciding what the board's role is. I think a board has two essential jobs: deciding who runs the company and deciding who owns it. Who runs the company is clearly a succession issue: Should we go inside or outside for the next CEO? Should we give the job to Joe or Bill or Sue?
Who owns the company is a strategic issue: Are we going to rebuff or accept an offer? Are we going to participate in the consolidation trend? And so on.
When these critical issues emerge, board members perk up and take charge, and this is often governance at its best. Succession and ownership represent opportunities -- or crises -- when a company's reputation and shareholder value are at stake.
But other than deciding who should run the company and who should own it, I believe that management should manage the business. And the board -- the governing body -- needs to sit back and let management manage.
Drury: What unique or defining experiences can you share with us from your role as chairman of Sara Lee's board?
Bryan: Probably the most important experience was getting appointed chairman of the board of Sara Lee at the age of 38. It was an enormous risk and rather stupid of the board, but there was a bit of a crisis at the time or the board wouldn't have turned to someone so young and inexperienced. In those days, our board had about 15 members, only three of whom were considered outsiders. One was chairman of Bank of America, one was chairman of the Continental Bank and another was an attorney from San Francisco -- not quite what we'd call independent outside directors today.
Initially, I got permission to undertake a major reorganization, to set formal policies and restructure the board. And so, we began practicing all of the things that were later to become somewhat standard governance practices, including the basic committee structure and committee rotation. It was a great experience to watch that work out, and I had the opportunity to test a lot of my ideas about how a board should function.
Restructuring the board
Drury: When you first restructured the Sara Lee board, what were you looking for in terms of composition?
Bryan: In those days we were looking for people who could be termed classically independent outside directors. I'd already decided -- contrary to the advice I'd been given -- that...