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The Boardroom Paradox
Why Smart Directors Do Dumb Things
by Gregory Boudreaux, Ph.D.
About this Book
Boards of directors play a key role in guiding many of our most important institutions but they mostly act behind the scenes. This book shows how boards performed in recent corporate crises, including at Enron, WorldCom, Hewlett-Packard, and Disney. Corporate directors have legal duties that they must fulfill in the boardroom. But too often directors have been led astray, sometimes by greed but sometimes by social forces in the boardroom that actually hinder the directors' abilities to address real issues facing the organization.
Without sensationalizing the issues, this book provides a clear explanation of why corporations have a board of directors, what they are responsible for, and why they have sometimes engaged in actions that contributed to huge corporate meltdowns.
About the Author
Gregory Boudreaux delivers seminars and speeches to directors and executives on issues in corporate governance, including board self-assessment, policy development, business ethics, and strategic planning.
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The boardroom is where directors exercise authority over the companies and institutions that they govern. In The Boardroom Paradox we learn that about one million Americans serve on boards that oversee everything from charities, schools and local utilities to multi-billion dollar corporations like Disney and Hewlett-Packard. Even though directors are supposed to bring independence and informed judgment to the job, there have been spectacular failures, including when companies have lied about their finances, when directors have been sued and paid large fines, and when CEOs have been indicted and sent to prison.
This informative book is written for directors, for executives who work for boards, and for readers who want to know how boards really work and what role they play in a company's success or failure and what role they are supposed to play in our system of enterprise.
Gregory Boudreaux has been a professor, a university dean, and a senior executive at a trade association where he was responsible for developing and delivering training programs for directors and for consulting with hundreds of boards and CEOs. He approaches the topic from three perspectives: from the legal principles that define the duties and liabilities of directors and boards; from the sociological perspective that sees the board as a group driven by norms and expectations that may not even be fully recognized by the directors themselves; and from a process perspective, whereby boards are encouraged to critically examine how they define their role, plan meetings, work with the CEO, and ensure their own independence and integrity. Boudreaux shows in a series of case studies how such boardroom processes can keep directors from recognizing red-flag warnings that ultimately wind up leading to public, media and government scrutiny, lawsuits, and in some cases corporate meltdown. In his most extensive analysis, he shows how the Enron board ignored warnings that were voiced by the company's own auditors, by an internal whistle-blower, and by outside business analysts who knew that something was wrong.
But rather than just find fault, Boudreaux presents a hopeful prescription about what boards can do to avoid failure. This is a book that directors should read and that boards should discuss.
The Boardroom Paradox was published by Foremost Press. It can be ordered through local bookstores and at ForemostPress.com, Amazon and Barnes & Noble.com.
134 pp, $14.97