The Directors' Consortium
Unraveling the Complexity of Board Decision Making

In a corporate culture that often glorifies strong and independent business leaders, the committee structure of the board is an anomaly. "There is no other structure like the board of directors in most companies," said Robert J. Mittelstaedt, vice dean and director of Wharton Executive Education and one of the founders of a new program for board members, The Directors' Consortium. "Because the board acts as an entity, this substantially increases the complexity of the decision process. It's totally unlike the rest of the corporate structure, which remains for the most part hierarchal to some degree, in which one person makes the final decision."

"Board members, often drawn from the ranks of top business leaders, are not necessarily skilled at working in this context," said Mittelstaedt, who explores the complexity of board processes in his session, "Strategy and Process" during the 3-day Directors' Consortium. The program for board members will hold its second session February 5-7, 2003, in Philadelphia. "While this course covers the practical aspects of what you need to know to serve on a board, we also help participants examine the way their own boards operate, to consider the various relationships and how they work together as a board."

For instance, how does a board identify non-performing fellow board members, and how does it address this situation once it is realized?

Even a basic assumption about who you as a board representative is not always so clear, Mittelstaedt cautioned. Consider the board of directors at Hershey Foods Corporation, for instance, which recently entertained offers to sell the company that has been a cornerstone of the local community for many years. "Events can suddenly change a board's priorities. The Hershey board is now challenged to see where it stands with uncertain owners. What is its relationship to the Hershey community and local businesses now?"

Other Wharton presenters at the Consortium include:

  • Professor David Larcker, who discusses compensation committee issues

  • Professor Elizabeth Bailey, who will cover planning and execution for CEO succession.

Faculty from the Stanford Law School and the University of Chicago Graduate School of Business cover legal and financial issues.

The Directors' Consortium is sponsored by the New York Stock Exchange, and the Institutional Shareholder Services (ISS) recently approved this course for academic credit for directors. Admission is limited to those already serving on boards, board secretaries, or those who expect to be serving on one in the near future.

The program draws upon best practices from across many boards. "Often the difference between a good board and a bad board is the process it uses," Mittelstaedt said. "Is the board inquisitive? Does it push to get information? It may look like boards don't do much in good times, but when challenges arise, a well-performing board can step in and help management resolve a crisis."

    

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