As we contemplate reforming the financial industry, is there anyway to insure the accountability of boardrooms save revoking charters and turning all corporations into democratically operated Co-operatives ?
American corporations in the 20th century were for the most part governed by an autocratic, virtually unaccountable few chief executives. Their malfeasance supported and possibly in many cases propagated by boards of directors given clear indemnity as a perk for signing the bylaws of their fiduciary responsibilities.
I blame the boards for the subsequent failures of corporations to act ethically, humanely, socially responsible or within good business practices, as they devour their own consumer base and finite resource supply . This is where I call out the global political corporate board class, as to their direct as well as enabling roll in catastrophic global war, theft, murder, rape, pillage and plunder, from a ways back then, til today and now.
Accountability comes with increased exposure
In Dec 30, 2009 Dr. Ken Eisolda practicing psychoanalyst as well as organizational consultant and author of ‘Hidden Motives’ a look at the hidden factors that really drive our social interactions. Read now Published ‘Unaccountable Boards’ (read below) and asked Why corporate board members don’t take their jobs seriously. I believe the answer he seeks lies in the long track record of the unaccountable nature of the board room, where actors are given a large measure of UN-accountability in their call to stand accountable.
For Whom Do They Work?
Modern nonprofit board governance — passion is not enough! | Chris Grundner | TEDxWilmington
This talk was given at a local TEDx event, produced independently of the TED Conferences. Chris Grundner is the president and CEO of the Delaware Alliance for Nonprofit Advancement. Since his arrival in February 2012, he has enabled the organization to nearly double its membership and significantly expand its reach. Grundner, originally from Buffalo, NY, received his Bachelors in Business Administration from the State University of New York at Fredonia. He earned his MBA from Southern Methodist University in Dallas, Texas. In 1999, Grundner moved to Wilmington to join the co-brand credit card division of First USA Bank as the Director of Business Development. Due to his significant achievements, Grundner became one of the organization’s youngest Senior Vice Presidents in early 2002. However, later that same year, his wife, Kelly, was diagnosed with a malignant brain tumor at the age of 29. Grundner left his job at JPMorgan Chase in 2004 after her passing and started The Kelly Heinz-Grundner Brain Tumor Foundation in 2005 with the goal of bringing national attention to the disease. Through the foundation, Grundner has launched two brain tumor awareness initiatives – GET YOUR HEAD IN THE GAME® and Tulips Against Tumors™ – both of which became national programs when the organization merged with the National Brain Tumor Society (NBTS) in March 2010.
Why corporate board members don’t take their jobs seriously.
“You might think that board members overseeing businesses that cratered in the credit crisis would be disqualified from serving as directors at other public companies,” writes Gretchen Morgenson in last Thursday’s New York Times. (See, “What Iceberg? Just Glide to the Next Boardroom.”)
She has a point. Board members have a legal and moral responsibility to serve the interests of shareholders, those who actually own the companies they serve. Their duty is to ensure that their companies are run soundly and profitably. But recent experience suggests that there is, in fact, little if any accountability.
She quotes Paul Hodgson, senior research associate at the Corporate Library, a corporate governance research firm: “None of these directors have stood up and said, ‘We made a mistake here by not calling management to account.'” He adds, “They have certainly avoided the limelight as far as blame is concerned. Moreover, they continue to get work as directors at other companies.”
One reason for this is that it the rules governing the selection and retention of board members are stacked in their favor. It takes a massive effort to challenge an official slate of board members. And there seems to be no interest within boards themselves to establish accountability – for several reasons.
It is generally in their interest to go along with management and continue receiving the perks they enjoy. Morgenson offers an amusing quote from Frederick E. Rowe, president of Investors for Director Accountability: “Here’s a conversation you’ll never hear: ‘Yes, I get paid $475,000 a year. I play golf with the C.E.O.; he’s a personal friend. I go to interesting places for board meetings, I am around interesting people, and I would never say one word that would jeopardize my position on the board.'”
But there is a group culture as well that instills conformity. Board members are often drawn from similar backgrounds and maintain outside relationships with each other through other corporate boards as well as country clubs, charities, and national associations. Collectively they form a kind of national community, with strong common interests and identities, a point that was established by Michael Useem’s research at Wharton 25 years ago.
Moreover, it is easy for “groupthink” to flourish among board members. Usually small in size, operating in secrecy, they receive limited information, and are prone to maintaining cohesiveness and preserving their established business identities along with their self-esteem. They want to support the CEO they selected as long as they can. As a result, they will often collude in ignoring disturbing information, in accepting excuses, stifling criticism. Certainly, they have little motivation to blame each other – or themselves.
John Gillespie, co-author with David Zweig, of “Money for Nothing,” a forthcoming book on board failures, notes that the culture of boards “doesn’t allow directors to do an effective job even if they wanted to.”
They are intelligent, experienced and accomplished people so there can be little doubt that they know about their responsibilities as board members, even if they don’t always know they know it. In this case, they don’t seem to want to know about their failure to ask tough questions and provide strict oversight.
As we are thinking about reforming the financial industry, is there anyway to get them to take their jobs more seriously? Psychology Today
What is a Cooperative?
A co-operative is a group of people acting together to meet the common needs and aspirations of its members, sharing ownership and making decisions democratically.
Co-operatives are not about making big profits for shareholders, but creating value for customers – this is what gives co-operatives a unique character, and influences our values and principles.
Own The Change: Building Economic Democracy One Worker Co-op at a Time
A short, practical guide for those considering worker owned cooperatives, made by GRITtv & TESA, the Toolbox for Education and Social Action. Featuring conversations with worker-owners from Union Cab; Ginger Moon; Arizmendi Bakery, Anti-Oppression Resource and Training Alliance (AORTA); New Era Windows; and more. Educational kits for use with the doc are available at: http://store.toolboxfored.org/own-the…
Excerpt advances to #10 thru #14;
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- Verizon’s executive management happens to be right up there in what many would consider stratospheric – and unaccountable – executive compensation. CEO Ivan G. Seidenberg pocketed nearly $30 million last year and more than $130 million over five years. No surprise that he’s now #10 on Forbes’ list of the top-paid CEOs. Research further:
- Throughout the 20th century, American corporations were governed by autocratic, almost unaccountable chief executives. Their word was law, and the only check on their power was a board of directors composed of their friends and allies. Then, in a stunning reversal, a momentous series of firings deposed the heads of some of the world’s best-known companies. Explore further:
A national effort spearheaded by City Comptroller Scott Stringer to empower shareholders at companies in which the New York City pension system invests has begun picking up support as corporations throughout the country begin to vote on his proposal.
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