24 Apr. 2019 | Comments (0)
(This post is part of The Conference Board Environmental, Social and Governance Center series on the job description of a corporate director from the perspective of various stakeholders. Quotes from this Q&A is highlighted in Just What Is the Corporate Director’s Job? Business Media Perspectives on the Board Member’s Job Description.)
Jeff Cunningham is Chief Executive magazine's editor-at-large and a professor of leadership at Arizona State University/Thunderbird School of Global Management, where he has also endowed the Cunningham Global Fellowship for next-generation leaders. He also is the founder of Thunderbird Opinions poll of business trends.
Cunningham serves as the managing director and senior advisor at the National Association of Corporate Directors (NACD). Also, he is an operating partner at TriArtisan Capital Advisors LLC and has been the chair of the board and CEO at Federated Holdings since April 2001.
He served as the chair, CEO and editorial director at Directorship Services LLC from 2005 to 2010 and was the founder and managing director at New England Ventures LLC. He served as a Senior Executive at various media and technology firms. Cunningham was the Publisher of Forbes Magazine and a Group Publisher of Forbes, Inc., where he was employed from 1980 to 1998.
He serves as a Director at Newsmax Media, Inc. He served as a Director at Genuity Inc. since September 2000; Data General Corp.; Quigo Technologies LLC; Equivest Finance, Inc. since April 2001; Schindler Holdings; Countrywide Financial since 1998; Ptek Holdings Inc. (alternate name Premiere Global Services, Inc.) from November 2000 to July 2004; Paging Network Inc. since 1998; TheStreet.com, Inc. from March 2006 to October 2008 and Sapient Corp. from September 16, 2004 to June 5, 2008.
He recently spent some time talking with Gary Larkin, the author of The Conference Board report, about the job description of a corporate director from the point of view of a member of the business media.
What follows are his thoughts.
As a longtime member of the business media, how do you see the job of a corporate director in today’s business environment?
It’s very hard for a member of the media to attend a board meeting because everything is off the record. The penalties for revealing something to a reporter are criminal. If a board director speaks to the media, they get fired from that board and never get another job. Think of the boardroom as a CIA facility. The media has to be humble when covering the board. Journalists should see outcomes, not the process when covering a board. I know of an academic who was studying boards by looking at minutes of their meetings. I told him that’s the worse thing to do. Those minutes are meant to opaque. The board has to act as a shadow consultant for management. Management wants to execute on the strategic plan while the board embellishes on the plan. The media should be focused on management and the way in which the board has approved management’s ideas and actions.
How important is diversity to the composition of a board?
I think there are two types of diversity. I call them Big Diversity, which includes gender and race, and “Small Diversity.” It is what is missing on boards. You can have devil’s advocates on the board. But someone is disruptive wouldn’t work on boards today. For instance, if you had Elon Musk [Tesla founder] on a board today it would be too disruptive. However, if he were on the GM board in 2006 he could have shared the knowledge of his battery with the automaker and GM could have changed the world.
How do you define tone at the top? Who owns that, the board or management?
It’s a bit of a misleading phrase. It starts with ethical behavior. I think it’s challenging. If you think you have a great leader, not a robot, then you expect that person to communicate the tone at the top to everyone in the company. In the end, you are dealing with a pyramid of people. The topic is important enough that Warren Buffett sends out a one-page memo on ethics every year. While that is a good practice, many boards may be reticent to follow suit as they realize they are not good at monitoring human dynamics.
How does a board guarantee it is getting sufficient information about its company? What kind of balance should there be between what they receive from management and external sources?
There is where the “Small Diversity” comes in handy. When boards take on new board appointments, they need to understand if those directors know how to spot when information has been corrupted by management. It’s very important that the board has people who have seen the broad information flow, both good and bad. At the same time, you need to see what people think about your company. You could talk to journalists for this. It’s like looking at your Yelp reviews and seeing if some complaint is an anomaly or a major problem or trend. One example of a CEO “checking in” on stakeholders is Lloyd Blankfein [former Goldman Sachs CEO and chair]. He made about 100 calls per day to different stakeholders to see what was going on.
The views presented on the ESG Center Blog are not the official views of The Conference Board or the ESG Center and are not necessarily endorsed by all members, sponsors, advisors, contributors, staff members, or others associated with The Conference Board or the Governance Center.