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A EUROPEAN VIEW The Corporate Board in Transition, by BOHDAN HAWRYLYSHYN/ Director, CEI (International Management Institute), Geneva Boards of directors used to be peaceful corporate sanctuaries. Their importance, their intensity of involvement varied across compa-nies and countries. Some were merely ornaments at the top of the corporate structure; others exercised the ultimate powers of decision in all key areas of corporate life. Some boards met to have a good lunch, exchange business gossip, and perform the necessary legal formality of approving what had already taken place. Others met frequently, scru-tinized voluminous reports and proposals, and made decisions that determined the future health and performance of the corporation. In most cases, the boards felt secure and unchallenged, both in their status as the supreme governing organ of the corporation and in their right to perpetuate themselves. In the seventies, all boards came under pressure, as a number of factors converged. After several decades of expansion, successful innovations, and profits, many corporations had to jam on the brakes and adjust to a leaner fife. But society's expectations, which had matured in the heydays of growth. could no longer be nourished easily. Workers expected increasing wages, job security, improved working conditions, and more say in management. Customers began to compare advertised promises against the performance of products—and grumbling increased. Communities whose very existence depended on corporate decisions wanted to be counted in. Home country govern-ments, under pressure of inflation, unemployment, budget, and balance of payments deficits, demanded greater corporate compliance with their policies. Host country governments wanted the subsidiaries of foreign corpora-tions to march more to the tune of their national objectives and less to the rhythm of foreign-based corporate headquarters. Caught between market downturns and rising constituency demands, some corporations could not adjust and went off the rails. Others, in their anxiety to continue to perform well, resorted to such expedients as swapping corporate favors or greasing willing hands. News, spreading quickly, was often blown out of proportion; and the boards, as the bodies ultimately responsible, frequently looked pale under such circumstances: not sufficiently informed, not sufficiently knowl-edgeable, or not sufficiently assertive. It is against the above background that I shall review the nature and direction of changes in boards—both changes that have taken place and those which are necessary or likely. My approach grew from a discus-sion with former colleague Dr. i.|. O'Connell, then a CEI faculty mem-ber who carried out research on boards in six European countries; he is now professor and dean of the Graduate School, Bentley College, Waltham, Mass. Responsibilities Boards first emerged as a group of owners or as direct nominees of the owners to whom they owed their sole responsibility. Board members were the custodians, protecting property, preserving assets. The responsibility was discharged by appointed managers, whose achieve-ments were summarized in an annual report and presented to the assembly of owners. This was the pure share-holder era of corporate life. 3
Object Description
Title |
European view: Corporate board in transition |
Author |
Hawrylyshyn, Bohdan |
Subject |
Boards of directors -- Europe |
Abstract | Illustrations not included in Web version |
Citation |
Tempo, Vol. 26, no. 2 (1980), p. 03-05 |
Date-Issued | 1980 |
Source | Originally published by: Touche Ross, & Co. |
Rights | Copyright and permission to republish held by: Deloitte |
Type | Text |
Format | PDF page image with corrected OCR scanned at 400 dpi |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Library. Accounting Collection |
Date-Digitally Created | 2010 |
Language | eng |
Identifier | Tempo_1980_Spring-p3-5e |