Rebalancing the board's agenda

Since 2002, the activities of corporate boards have been dominated by the governance agenda. In Europe - to an even greater degree than the United States - governance codes have proliferated. This paper examines the resulting imbalance, where compliance with codes of conduct threatens to overwhelm the board's primary responsibility, i.e. the creation of wealth. We consider a model of board processes that starts with four key roles: setting direction, marshalling resources, controlling and reporting, and evaluating and enhancing for the next cycle. "We must urgently bring back some pragmatism to corporate governance … And if we want governance schemes that actually work in a real business environment, they must be based on principles, not detailed rules that try to pre-empt all the eventualities a lawyer can think of." Peter Brabeck-Letmathe, CEO, Nestlé SA. The governance agenda has rightly drawn attention to the work of board committees and the question of the independence of mind directors need to show. But it may have diverted focus from three questions that ought to figure more prominently in the board's work: * How should the board apportion its work between compliance, risk assessment and setting strategic direction? * How do directors become determine when to focus on risk-mitigation and when to encourage strategic risk-taking? * In face of greater personal accountability for governance compliance, where do they draw the line between their role overseeing management and interfering with management's responsibilities