Friday, September 11, 2009

The Voluntary Nature of Board Service

Today is Volunteer Day — a first National Day of Service in commemoration of the 9/11 attack. Building on this day, the AP reports that organizers hope the 10th anniversary of 9/11 in 2011 will mark the single largest day of service in U.S. history.

A day of volunteer service like today is an opportune moment to recognize a special breed of volunteer who is critical to the workings of free market capitalism. I'm referring to the corporate director.

Rabid criticism has been leveled at corporate directors for coming up short during the financial meltdown and resulting recession — in assessing risk and exercising sufficiently diligent oversight. Deserved? In many cases, yes.

But what we don't ever want to lose sight of is the voluntary nature of the corporate governance system we have in this country. Congress, the SEC, the NYSE, the Delaware courts, RiskMetrics, CalPERS ... all these bodies and more come up with their directives and notions on how a board should be organized and conduct itself. However, none of these regulators and sundry protectors of the system conscript individuals to carry out the complex duties of directorship. It is up to the corporation to find individuals who will volunteer to join its board.

Companies need smart, accomplished people who have a sense of duty, honor and statesmanship, of interest and desire, of noblesse oblige, to willingly take on the immense responsibility and accountabilities involved in corporate oversight. This is no inconsequential bit of volunteerism. Nor is it an insignificant recruiting challenge.

Our governance system has its weaknesses, which were mightily exposed by the financial crisis starting in 2007. But for a system that depends largely on an army of volunteers, it is remarkable how well it functions and how much good work has emanated from the collective intelligence and integrity of the man and women who have stepped up to the role of corporate director.

On this national day of volunteer service, and in the weeks ahead when we start fielding new regulatory salvos aimed at corporate boardrooms, let's be mindful of the voluntary nature of serving as a corporate director. These volunteers make the governance system work ... and will make it work even better in times to comes.