Do you think a more representative and active board will prevent a similar scenario for United Way in the future? Why or why not?
In the past, most boards of directors have tended to be rubber stamps, closely allied with top executives and even composed mostly of corporate officials. In some organizations today this is changing, mostly in response to critics concerned about board tendencies to always support the status quo and perpetuate the ?oestablishment.?? More and more, opinion is shifting to the idea that boards must assume a more activist role:
The board can no longer play a passive role in corporate governance. Today, more than ever, the board must assume an activist role—a role that is protective of shareholder rights, sensitive to communities in which the company operates, responsive to the needs of company vendors and customers, and fair to its employees.
This was written more than 20 years ago. But change is slow. Incentives for more active boards have been the increasing risks of liability for board decisions, as well as liability insurance costs. Although the board of directors has long been seen as responsible for establishing corporate objectives, developing broad policies, and selecting top executives, many people consider this no longer sufficient. Boards should also review management’s performance to ensure that the company is well run and that stockholders’ interests are furthered. Moreover, there is pressure that society’s best interests not be disregarded, which translates into an active concern for the organization’s public image or reputation—its ethical conduct.
But the issue remains: To whom should the board owe its greatest allegiance—the entrenched bureaucracy or the external publics? Without having board members representative of the many special interests affected by the organization, the inclination is to support the interests of the establishment.
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