See the article HBR online—https://hbr.org/2016/05/boards-arent-the-right-way-to-monitor-companies
And, my comments below:
While I agree that boards are generally not independent. This is the result of a selection process that generally is driven by the CEO and results in board members who are beholden to the CEO and not the shareholders, I am not so sure that the point that because board members have significant outside commitments they do not have the time to provide proper oversight.
A good CEO should not be expected to micro-manage the company and this applies to the Board to an even greater degree. I believe that the lack of careful definition of what it means to oversee the company is more of an issue than time commitment. The CEO, just like the board is expected to oversee the company in all of its complexity and (when it works) does so by providing leadership, setting clear direction, agreeing to performance metrics and holding his/her managers accountable to perform within the parameters outlined in clearly articulated agreements that are defined in the context of the direction that she/he provides.
I would argue that the relationship between the Board and the CEO should be defined by the same careful definition and agreement to the Company’s values, a clear strategic (where we are, where we want to be and how we get there) direction and short term performance goals.
This in combination with:
- An independent Board (whose selection is managed by a carefully selected and independent lead Board member, not the CEO) that holds the CEO accountable;
- A good external auditor;
- Well defined operating controls (overseen by an internal) audit function that reports to the board
should provide the oversight that is required to ensure that the shareholders’ interests are being properly managed.