Korn Ferry

Having Second Thoughts

It used to be that taking a role on a government, civic or non-profit board was a low-risk proposition. Leaders got a chance to increase their personal profile, as well as that of their organization. They also got a seat at the table to influence political thought or legislation for themselves or their businesses with little incremental cost other than time. 

But as a string of resignations this week by chief executives and other top leaders from the presidential manufacturing council show, that's no longer the case. Each of the executives left in the midst of a politcal controversy before the council and a similar economic policy group were disbanded on Wednesday. "We are living in far more polarized environment with people on the extremes who have different worldviews and opinions about the relationship between government and corporations,” said Rick Lash, senior client partner at Korn Ferry Hay Goup. “Every institution is under massive external scrutiny by people who have legitimate concerns about what boards are trying to achieve.”

The resignations are hardly the only corporate executive or civic board directors to be thrust into a maelstrom outside the scope of their roles. For instance, chief executives from the technology, finance, and entertainment industries either resigned from presidential councils or used their positions on those councils to publicly rebuke the decision to leave the Paris climate accord.

Over the last decade there has been a movement by investors, consumers, and employees toward more board accountability. Those stakeholders will make judgments on a leader's decisions at both their home organization and outside groups they're associated with, says Tierney Remick, vice chairman of Korn Ferry's Board and CEO Services practice. "If you're a leader in a high-profile position, you have to understand the implications of your decisions, both its intended and unintended effects," she says.

Social media increases the possibility of a major public controversy erupting. “There is a reputational risk to the person and the company by political buffeting on social media,” said Martin Coyne, chairman of the CEO Learning Network, “and it doesn’t have to be a loud majority voice that crucifies you.”

There used to be three important questions to answer before agreeing to take any board position—public, private, civic or non-profit. First, what’s the benefit to you? Second, what’s the benefit to the company or industry? Finally, what are you giving up by not taking the role?

Now, increasingly, there’s a fourth question to ask: What is the risk to you and your organization by agreeing to a board seat?

Contributors

  • Rick Lash

    Senior Client Partner

  • Tierney Remick

    Vice Chairman, Board and CEO Services

    Bio >

 

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