GE’s Lesson: Boards Mind Your Own Business

Boards need a bright line when it comes to how intrusive they should be in the C suite.

Anyone who has spent time in the boardroom recognizes that the description “potted plants” has little to do with horticulture. The media calls these ‘rubber stamp’ boards, and Google shows nearly 30 million results for this term. It’s a big problem, but not what you may be thinking.

Governance gurus believe complacent boards are the status quo. They trot out ex post facto accusations to blame directors for crises, even the unpredictable nature. The result is twofold: it provokes cynicism among business journalists who write for public consumption, but it also breeds mistrustfulness into the board/management relationship.

Unfortunately, society hears a dog whistle that every wrong turn or hiccup is a sign the C-Suite is out of control. The Enron debacle of 2001 activated a virulent strain of more intrusive corporate governance and, after the unanimous passage of the Sarbanes-Oxley Act of 2002 (SOX), there was no one willing to fight against the tide of increased regulation. Less than six years later, the collapse of Lehman Brothers led to the conclusion that SOX wasn’t enough, and the government prescribed Dodd-Frank, an overwrought 1,000 pages of regulation. Lost on the voting public was the fact that the Lehman board was not guilty…