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Support and Performance Tracking
Directors report that they are often reluctant to
challenge management despite concerns – partially because
they feel management has better information and company knowledge
and partly because they don't want to antagonize management. In
addition, managements have blind spots. However well intentioned,
mistakes are made and important risks are under-estimated or missed
entirely. Lucent, Halliburton and AOL/Time Warner directors could
certainly attest to these risks and their implications for shareholders.
For a board to contribute effectively, it must have
information that is both comprehensive and dependable. Achieving
that requires that boards:
1. Actively participate in determining the nature,
timing and magnitude of the internal information they want to
receive.
2. Establish a high-level scorecard that tracks
all issues of concern to the board in terms of both actual-vs.-target
outcomes and trends.
3. Independently conduct periodic reviews of the
company’s operations – bringing in a team of outside
assessors to look at the company's financial, strategic and operational
health as a strategic buyer might.
4. Obtain independent analysis of significant management
recommendations to provide a second opinion and minimize the risks
of management blind spots.
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