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Directors in tricky spots |
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| September, 21st 2006 |
| Apt read, even as the HP case simmers on, is Directors' Dilemmas by Patrick Dunne, from Kogan Page (www.vivagroupindia.com). "A fascinating insight into the corporate world where people, power and money can make for a dangerous cocktail," teases the back cover.
The book is into the second edition, because "the judgment, resilience, and communication skills of directors and business leaders worldwide have been severely tested on a whole range of issues since the first edition (2000)." The recent years have seen some of the worst corporate debacles.
"A fine sense of judgment is at the core of success in helping resolve dilemmas," explains Dunne in the intro. The most important aspect of dealing with dilemmas is the how of communicating judgment to achieve the desired result, he points out. "All too often an inspired decision or course of action is undermined by poor, or ill-judged, communication."
But first, what's a dilemma? "A tricky spot with no immediately obvious conclusion and where the alternative solutions all involve some degree of pain," defines Dunne. Alternatives can be more than two, please note. Fundamental drivers that cause dilemmas for directors are four, he lists. First is `confusion over the role of the board'. Role evolves, reminds the author. "As the company enters new phases of development in scale, breadth and ownership, the nature of the role of the board will need to change."
The second factor is that humans are involved. "When the board's interests and those of the individuals on the board are perfectly aligned, and more importantly, when they believe this to be the case, then there is seldom a problem."
Alas, this is often not the case! When new members join the board, the dynamics change. Cross-cultural boards have their own type of human problems.
The third reason for dilemmas is the fact that situations change. "A common problem for start-up company boards when they are successful is that the reasons they started up in the first place may be the reasons why they don't like managing a bigger business. Few start-up managers make a Bill Gates transition."
And the fourth reason is money, which can affect people in different ways. "The important thing as a director is to be clear about how it affects you and, just as importantly, how it influences your colleagues in their behaviour and approach to making decisions."
The book discusses many dilemmas, and these come with interesting one-liners, such as `a family at war', `your best performer robs you blind', `going with dignity', `a palace coup', and `a director no more'.
Dunne's intro mentions that `the removing directors' section in the previous edition had led to the most calls for advice. Only, it is one of the `most dangerous areas' to give advice.
Essential buy in case you are debating whether to read or not to.
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