Monday, March 30, 2015

Times: American boards are exceptional--and not necessarily in a good way

The recent New York Times piece on the behavior of (mainly for-profit, but by extension...) US organizations' boards of directors, goes some way toward explaining the anechoic effect.

The redoubtable Gretchen Morgenson reports on the gulf between company directors' approach to transparency in the United States when compared, say, with a lot of boards in the UK, Holland, and the Scandinavian countries.

The novel idea of taking shareholders' views into account seems to be far more common on the other side of the pond. When it comes to for-profit entities, of course, investors' expectations come into play--you'd think this would be an easier case.

One would think that directors would take their fiduciary responsibilities seriously, and at least listen. In the US, however, there seems to be a systematic process of hiving off the directors in a sort of anechoic chamber. Two-thirds of board members in one survey didn't communicate at all with the outside world. Over half hadn't even had a discussion about their organizational communications policies!

Non-profits--and health care spans both types--don't have investors per se. But they have lots of stake-holders. Health Care Renewal's editor and lead blogger, Dr. Poses, has reported in these pages early and often about the lack of transparency on both sides of this rather artificial divide. It's a bit surprising, then, to hear that accountability is more highly valued in Europe than in these democratic United States.

My own experience with boards has been highly consonant with this insular approach. Directors seem mostly there to prop up management. Rubber stamps are the most important tools. Fat wallets also help. Circling the wagons is the most important skill set. Board members in health care organizations, including those that are not-for-profit, either don't talk about what they see lacking, or, scarier still, it's nicely hidden from them. Probably both. I've heard chairpersons publicly excoriate directors, in front of their peers, for "free-lancing" when they engaged in responsible outside communication.

These boards, and especially their chars, almost invariably defer to management. Non-profits wait until their top management do something not merely execrable but illegal and humiliating before they remove them. Is this laziness or selling-out? Unclear. Maybe both.

If this is the kind of American Exceptionalism our organizations subscribe to, they might want to try being a bit more unexceptional!


Steve Lucas said...

This is also common in our churches and denominations. Pastors are no longer accountable to the congregation and work to surround themselves with admirers at the expense of the congregation as a whole.

Denominations feel the need to “lead” their churches in ways and places not called for in their charge. This is all financed by the members who when they complain are told they do not understand and everything will be all right if they would just contribute a little more money.

When our three professions fail, medicine, law, and the clergy, how can we expect society to reflect a better standard than the one we are forced t deal with on a daily basis?

Steve Lucas

Unknown said...

I was an ex officio member of my local hospital board as chair of a medicine department committee. Clearly, the voting members of the board were go along, get along people who never questioned any executive decision. They were nice mild older community members and physicians who could be counted on to not raise their hand. D&O insurance meant that they were at no risk or responsibilty.