Inside the Boardroom

In light of corporate malfeasance in recent years, the governance of corporations has been receiving great attention from regulators, researchers, shareholders, and directors themselves. Based on Richard Leblanc's in-depth five-year study of 39 boards of directors of both for- and not-for-profit organizations, Building a Better Board goes behind the scenes to reveal the inner workings of boards of directors, including how they make decisions.

Recently chosen as one of Canada's "Top 40 Under 40"(TM), Dr Richard Leblanc is an award-winning teacher and researcher, certified management consultant, professional speaker, professor, lawyer and specialist on boards of directors. He can be reached at rleblanc@yorku.ca. James Gillies, PhD (Toronto, Ontario, Canada), is Professor Emeritus at the Schulich School of Business, York University, where he serves as Chair of the Canada-Russia Corporate Governance Program.

Foreword xv

Acknowledgements xix

Introduction 1

Chapter 1: Boards of Directors Have Failed and We Don’t Know Why 5

Chapter 2: The Many Forms of the Modern Corporation 31

Chapter 3: Contemporary Directors: Who Are They, What Do They Do, and How Well Do They Do It? 49

Chapter 4: Best Board Practices and Assessments: Necessary but Not Enough 81

Chapter 5: The Traditional Board: The Triumph of Structure 105

Chapter 6: The Effective Board: Function Not Form 133

Chapter 7: Effective Directors for Effective Boards: Putting Them Together 153

Chapter 8: The Director Behavioural Types 171

Chapter 9: A Special Type of Director: The Chair of the Board 201

Chapter 10: “C-B-S-R”—How to Build a Better Board 221

Chapter 11: The Coming Revolution in Corporate Governance 245

Appendix A: Qualitative and Quantitative Research Methodologies: How Do They Differ? 259

Appendix B: The Research Process: Getting into the Boardrooms, Obtaining the Interviews and Analyzing the Data 263

Bibliography 285

Index 299

DR. RICHARD LEBLANC is an award-winning teacher and researcher, certified management consultant, professional speaker, professor, lawyer and specialist on boards of directors. He is an Assistant Professor of Corporate Governance, Law & Ethics at the Atkinson Faculty of Liberal and Professional Studies, York University.

DR. JAMES GILLIES is Professor Emeritus of Policy and founding Dean of the Schulich School of Business at York University. Before joining York, he spent fifteen years as a member of the faculty of the School of Business at UCLA. Professor Gillies has also served as a Member of Parliament and senior policy adviser to the Prime Minister of Canada, and is a member of the Order of Canada.

Never before in history has corporate governance received as much attention as it now does. Recent corporate scandals and revelations of questionable business ethics have forced companies and their leadership under the microscope. To deal with the problems, legislation, codes of conduct, and guidelines for corporate governance practices are at an all-time high.

Most of the recent prescriptions for improving corporate governance (including the Sarbanes- Oxley Act) focus on the structure of boards—their size, composition, independence, and so on. But this book shows there is no direct correlation between board structure and corporate performance. Inside the Boardroom goes where few have gone before—behind the closed doors of actual boardrooms—to reveal how boards really work. Based on a five-year study, this book goes behind the scenes to reveal the inner workings of boards of directors, candid interviews with directors, and a comprehensive investigation into boardroom processes.

• Explains how boards should be constructed so that, as well as performing monitoring and compliance activities effectively, they also add real value to the enterprise.
• Offers practical advice on building a better board, including: how to determine and assess director competencies, how to deal with dysfunctional directors, how to recruit and retain quality directors, how to create position descriptions, how to develop director orientation and education programs, and how to establish performance standards for the board and its individual members.
• Features compelling first-hand comments from directors, regulators, chief executive officers, and shareholders that offer candid, and sometimes shocking, revelations of what really goes on behind the boardroom doors.
• Provides valuable insights and prescriptions for corporate boards in any industry, government corporations, and not-for-profit organizations.