7 No Nonsense Principles for Corporate Directors

Now that you've incorporated your business or are close to doing so, we'd like to share with you some insight and advice for growing your new business. Keep in mind that as a corporate director, you will face new challenges in addition to the opportunities that come with corporate ownership.

These 7 no nonsense principles for corporate directors were adapted from an article written by Hoffer Kaback in Directors & Boards Magazine.

By applying or avoiding these principles to your everyday decision-making, you can make the most of your company's prosperity.

1. The Davy Crockett principle

Davy Crockett once said, "Be sure you're right and then go ahead." He always would say what he thought was right, fight hard for it, vote "no" when he disagreed, and resign if something was decided against your ethics and principles. This philosophy is highly applicable in today's business environment. If you always "do the right thing" you will always come out ahead, especially when trying to convince or persuade others of your desires and intentions. Crockett is also known for "picking his spots" and "saving his bullets." You should, too. Otherwise, you compromise your ability to effect change.

2. The Sam Rayburn principle

Sam Rayburn, the late speaker of the House of Representatives, held the view that "To get along you have to go along." Carried too far, this becomes "I'll ignore your problems if you'll ignore mine." Remember your duty is to the business and it's customers and not to your fellow directors. While there has to be give and take, you must strike a balance between too little flexibility and too much.

3. The Justice Rabinowitz principle

Justice Rabinowitz once remarked "Never do anything you wouldn't be comfortable explaining to the Alaska Supreme Court." It's a useful rule, but all it does is avoid risk, it doesn't help you with the day-to-day decisions you have to make to serve as a corporate director.

4. The Always Trust Management principle

"Always trust the executive director." This is a prescription for disaster. It's the error the United Way of America board made with its former president, William Aramony. The unwillingness to challenge management, when challenge is warranted, is a breach of your duties as a director.

5. The Never Trust Management principle

This is the other extreme and is grossly unfair to your executive director and staff. Most executive directors are diligent, forthright, honest and hard-working. This attitude will make your tenure as a director unpleasant and ineffective, and can drive off competent staff.

6. The Healthy Skepticism principle

This term comes from the attitude required of outside auditors engaged to perform audits or reviews of a business. Basically, it says that your executive director must earn your trust. It's not too far from what the law requires of a director, and it serves for all manner of board of director decisions, not merely risk management issues.

7. The Emanuel Lasker principle

Grand Master chess player Emanuel Lasker believed in playing not necessarily the best move inherent in a chess position but the best practical move tailored to his opponent's style. Your response and performance as a corporate director to a given situation must be suited to the particulars of the situation. The right answer at one point in time may be the wrong answer at another. It is legitimate to resolve some questions differently at different times or in different situations.

Building a successful company requires dedication, commitment and specialized knowledge. Your decision to incorporate was a major step in the right direction. If you follow these principles, you will continue along that path.

© 2003 by Active Filings LLC.

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