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| Home - Industry Article - Aug 02 Issue |
Questionable Corporate Behaviour: Ethics in the Boardroom
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Prepare, engage and stay engaged: There have been myriad articles written about the decreasing level of involvement of today’s Boards, and questioning the efficacy of the Institutional and Independent Directors. Much of this stems from each of us being overextended and often ill – prepared for Board Meetings. Board Members; insist that you receive materials sufficiently early to review them carefully, to prepare questions and to come armed with opinions on the important topics. CEOs; leverage your efforts in preparing for the Board Meetings as a periodic check up on the health of your organization, and use the Board meeting as a forum for airing your strategic thinking to ask for specific support and advice from your Board. Everyone should be prepared, and willing, to provide timely advice aimed at avoiding any number of proverbial slippery slopes which today’s companies face.
Make trust an explicit job description criterion: While we all have an innate sense of whether a job candidate appears trustworthy, make it a more explicit dimension of investigation. Research the candidates background and ask questions aimed at understanding their morale fiber and history more fully.
Build the culture from the first Board meeting: I deal with young private companies, which we hope will someday be large public companies. These concepts are no less important, albeit they are less complex, at a 10-person start-up than at a large public company. Much like a child, an organization’s earliest influences will be its basis for dealing with challenges later in life.
Make sure the CEO understands the Board’s directives: A frequent cause of trouble in challenging times is lack of clarity about what the actual directives are. We have all given edicts which we thought were crystal clear, only to have something entirely different be proudly delivered. Ensure that the CEO understands what was decided and which direction the company should be headed. Be prepared to reiterate and explain the rationale for any decision. CEOs, this also applies for your leadership Team. VPs, for yours, and so on…
Take the long view and don’t shoot the messenger: One of the lamentations, and plausible reasons for current corporate behavior, is that the markets are near-sighted, and the CEO reign is shortening. These are both all too true. Ensure you are balancing the short-term necessities with the longer-term strategic mission. Absorb the good news, and the bad, with equal poise. So long as you trust your employees, believe they are inspiring the trust of their respective Teams, and your people have their hands fully on the wheel; aggressively support them. If any one of these items falls into doubt, it should be addressed immediately, and likely warrants replacement of the individual in question.
Stay informed on the current legislation and ethical debates and discuss them as a Board. Form an opinion and voice your concerns over accounting law, SEC resource shortages, stock options, corporate accountability, etc. Look for examples of leadership successes in a variety of contexts, and share your findings with others. These are important topics, and discussions around them will create a framework for dealing with your company’s specific challenges.
I am certain we have not heard the last of accounting errors or insider trading scandals. Sales cycles will remain long, and public markets fickle. But we do have the responsibility, and yes, the authority, to turn the tide of public opinion, one challenge, one Board Meeting, and one company at a time. I would enjoy hearing your views, similar or different, on this topic or leadership and ethics in general.
Jim Matheson, Principal of Flagship Ventures, has been a principal at OneLiberty Ventures since 2001, after working with the firm as an associate in 2000. Previously, Jim served for 15 years as an Officer in the U.S. Navy and Fighter Pilot. His duties included being stationed on aircraft carriers flying combat missions in Iraq and Bosnia, as a TOPGUN Instructor, and as the Officer-in-Charge of the Navy's West Coast adversary training and evaluation squadron. Jim also gained broad experience in emerging weapons system design, testing and procurement, and was involved in many of the Navy's modern IT initiatives. He continues to serve as a Commander in the US Naval Reserves. Jim earned a BS in Computer Science from the U.S. Naval Academy and an MBA from The Harvard Business School.
Jim's primary focus area is software applications and infrastructure. He serves as Director on the Boards of Yantra and Flamenco Networks and works closely with Affinnova, Brainshark, Blue Agave Software, and OnExchange, all Flagship portfolio companies.
 
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