Corporate culture: are boards of directors responsible? A panel of experts discusses the role of boards of directors in driving corporate culture.

• Author: Sweeney, Daniel J.
• Position: Corporate governance

The game has definitely changed for boards of directors, and this subject was high on the list of topics in June at the Changing the Game Forum, the second annual such program sponsored by the Vail Leadership Institute's Center for Corporate Change. Representatives from the business and academic communities were invited to Beaver Creek, Colo., to identify, discuss and debate key issues affecting the ethical conduct of business and its leaders.

Three core issues were researched and debated: the separation of the CEO and chairperson positions; the roles and responsibilities of boards of directors in driving corporate culture; and multiple stakeholder valuation.

Following is a brief summary on the session related to the board's role in shaping corporate culture:

ATKearney Inc. Vice President Rand Garbacz presented a position paper by ATKearney, a strategic management consulting practice headquartered in San Francisco. Garbacz said, "Culture impacts the interests of all other stakeholders, and thus derivatively has a direct, measurable impact on shareholder wealth." Culture, as a governance factor, he added, is neither optional nor tangential.

ATKearney maintains that boards need to take action in five critical areas of governance:

1. Monitor corporate performance with forward-looking and nonfinancial business indicators;

2. Strengthen business strategy through diverse perspectives and ongoing attention;

3. Improve risk monitoring and mitigation;

4. Shift from succession policy to successor readiness;

5. Foster a constructively challenging culture, engaging as owners vs. as reviewers.

The Panel Discussion

Financial Executive Managing Editor Ellen M. Heffes, serving as moderator for a panel discussion, led with opening remarks. "While it's obvious that not all boards have neglected their responsibilities," she said the general business press has included boards among today's culprits in the spate of corporate malfeasance. Yet, Heffes noted that it's not perfectly clear that the board has or should have a role in shaping the corporate culture and the panelists would present their views.

A critical question she posed is: "What was the culture and ethical behavior like at companies like Enron, WorldCom, HealthSouth and Adelphia that allowed the malfeasance or misguided judgments to happen?" And, she asked, "Where were the boards?"

James Sprayregen, partner at the law firm of Kirkland and Ellis, said that board culture and activity, or inactivity, is a...