Businesses often have board of directors. The board’s key duties are to provide
strategic direction, not to meddle in the organization’s day to day affairs. Board
members who cross this line are undermining the authority of the executive
team including that of the chief executive or CEO. Similarly, staff should not ask
the board to take on day-to-day tasks that the staff should be handling.
Consider the case of this board that was running an organization:
On nothing more than the whim of one board member, a private company
purchased a large tract of land for millions of dollars that included an
abandoned shopping mall with the idea that the company would relocate to the
facility after it was remodeled. The board member thought the large parking lot
could be used to park all of the company’s vehicles in one place for logistical
benefits, security, and maintenance purposes. The CEO of the company was
against the purchase of the property for several reasons, but he did not create a
counterproposal nor did he speak out against the purchase, much to the
frustration of his executive team. His apathetic response was because of many
reasons. He feared the board members. He also wanted to keep peace and felt
that “everything will work out on its own.”
The building was in such bad repair it would cost over 400,000 dollars to
renovate it. Also, upon closer inspection, it was found that the huge parking
area would need repavement to handle the weight of the vehicles, which
included heavy equipment. The building was purchased and even after months,
it sat unused and deteriorating. The surrounding property has gone to seed.
That decision cost almost three million dollars of company assets.
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Questions:
I................. What was lacking in terms of leadership in the above scenario?
Discuss in terms of mistakes made by the Board member, the CEO, his executive
and the other Board members.
II............... Could the CEO have acted differently to the pressure of the Board
member? What is the leadership role of the CEO and the board in controversial
situations? What could have been done to prevent losses to the company?
