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The Board Book: An Insider's Guide for Directors and Trustees
"By far the best book on corporate and institutional governance." —Nicholas Katzenbach, former attorney general of the United States
In his new foreword to The Board Book, former Mellon Foundation and Princeton University president William G. Bowen brings his immense experience to bear on the most pressing questions facing boards of directors and trustees seeking collaborative relationships and placing a renewed emphasis on sustainable initiatives. The strategies Bowen relates throughout the book foster the collegiality and sense of purpose—more important in today’s turbulent times than ever before—that are integral to any effective board.
In his new foreword to The Board Book, former Mellon Foundation and Princeton University president William G. Bowen brings his immense experience to bear on the most pressing questions facing boards of directors and trustees seeking collaborative relationships and placing a renewed emphasis on sustainable initiatives. The strategies Bowen relates throughout the book foster the collegiality and sense of purpose—more important in today’s turbulent times than ever before—that are integral to any effective board.
241 pages, Kindle Edition
First published April 1, 2008
34 people are currently reading
85 people want to read
About the author
William G. Bowen
41 books4 followersPresident emeritus of the Andrew W. Mellon Foundation and Princeton University. He is the author or coauthor of many books, including the acclaimed bestseller The Shape of the River: Long-Term Consequences of Considering Race in College and University Admissions, Crossing the Finish Line: Completing College at America's Public Universities, and Lessons Learned: Reflections of a University President (all Princeton).
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Displaying 1 - 11 of 11 reviews
September 23, 2024
I may come back to pieces, but overall felt dated and verbose.
July 11, 2023
William Bowen starts off The Board Book with the observation that "how boards actually work remains mysterious to many people, including many of those elected to serve on boards. Where power resides, how it is distributed and exercised, and how it is limited and controlled often remain obscure." Many board members pick it up as they go along, learning through observation and experience, asking more experienced board members for counsel. This book is an attempt to unpack the black box of boards.
Bowen served on boards for both for-profit organisations such as Amex and Merck and nonprofit organisations such as the Smithsonian Institution and the Sloan Foundation; as a former President of Princeton University, he also worked closely with the university's board of trustees. His book therefore focusses primarily on large, publicly owned and wider traded for profit corporations (as opposed to private companies, which have a different operating context), and on service-providing, grant seeking nonprofits, including colleges and universities (and excluding non profits such as labour unions and trade associations and to a certain extent, grantmakers). It is also very much situated in the American context. Nonetheless, there are valuable lessons to be drawn from the book, even if one's organisational context is quite different from those discussed by Bowen.
So what exactly is the role of a board member? Bowen notes that their job is "by no means only to help organisations avoid serious missteps; they also need to be proactive partners in working with the CEO/president to achieve highly positive outcomes…A properly functioning board provides checks and balances by adding layers of judgment and protections against abuse of power [by the "aspiring autocrat"], self-dealing, favouritism, and just plain foolishness. More positively, the existence of a board encourages the development of a shared sense of institutional purpose and an awareness of the broader social, economic and political context within which decisions are made. Nonresident directors and trustees can approach issues from a broader and more disinterested vantage point than can those immersed in day-to-day responsibilities. They can bring fresh perspectives to bear on tough questions at the same time that they can testify to outside constituencies on behalf of a company or a college. In both for-profit and non-profit sectors, boards can serve as valuable connectors between the work of a specific company or social service provider and the external world that conditions the success or failure of the organisation in so many ways…contribut[ing] substantive ideas or rais[ing] big warning flags". In particular, where the organisation is small and lacks a depth of staff expertise, boards can be an invaluable resource.
Specifically, Bowen summarises a board's role into the following 8 points:
1. Select, encourage, advise, evaluate, compensate, and, if need be, replace the CEO
2. Discuss, review, and approve strategic directions: Boards have an obligation to take a long-term view and "to resist any tendency to place excessive emphasis on short-term considerations". Indeed, given that most organisations have a tendency to focus on immediate priorities and tasks, having the board provide that focus on the long-term is invaluable. Bowen cautions, however, that boards cannot confuse "participation in the direction-setting process with actual policy making…Rather, they raise questions [which are almost never purely financial in nature], debate policy choices, and eventually adopt or reject recommendations brough to them by the president or CEO."
3. Monitor performance: Here, with reference to the non profit world, Bowen observes that "it is surprising how frequently no real planning occurs…and it is even more surprising how frequently plans that were not adopted are not tracked in even the most rudimentary fashion." He does acknowledge that the monitoring task in the non profit sector is complicated by conceptual issues such as what are the most important outcomes to measure, and how can they be measured".
4. Ensure that the organisation operates responsibly as well as effectively: This is about having proper policies and procedures for compliance with legal and ethical standards, and proper controls to monitor expenses, etc.
5. Act on specific policy recommendations and mobilise support for decisions taken.
6. Provide a buffer for the CEO, i.e. "take some of the heat".
7. Ensure that the necessary resources, both human and financial, will be available to pursue the organisation's strategies and achieve its objectives. This includes getting to know officers other than the CEO, and being visible at ceremonial events and large-scale, quasi-public, managerial meetings - "just showing up".
8. Nominate suitable candidates for election to the board, and establish and carry out an effective system of governance at the board level.
Being more interested in non-profit boards, I paid closer attention to the bits that related to these organisations and those more relevant for my operating context. For instance, the notion that unlike the boards of for profit organisations, which focus on enhancing shareholder values, non-profits should focus on what Bowen (citing Kevin Guthrie) terms "maximum return on mission". This is not a trivial endeavour, given the conceptual issues mentioned above.
I skimmed chapter 2 on Board Leadership, which debates whether the CEO and Chairman role should be combined or kept separate (Bowen leans towards the latter); chapter 3 on Compensating the CEO; chapter 4 on Evaluating and Replacing the CEO; Chapter 5 on CEO Transitions. Chapters 6 on Building the Board, and Chapter 7 on Board Machinery were probably the most useful in this respect.
So what are some of the practices and disciplines that non-profits should have in place, including drawing inspiration from those characteristic of corporate boards? Some of the things Bowen highlights include:
- The routine use of benchmark data
- The constant monitoring of discrepancies between planned outcomes and actual results
- Selecting good board members and aligning them with the role of board member and the mission of the organisation is critical; Bowen suggests developing a matrix that lists the organisation's ongoing needs, the gaps created by retiring board members and consulting this when doing board recruitment and succession planning. Equally important is building a sense of "real group cohesion, interaction, debate and collegiality". How might organisations create opportunities for board members to build a sense of cohesion, to enjoy working together? As such, more important than credentials are "a demonstrated history of accomplishments in whatever the field [a track record of actually getting stuff done]…and possess[ing] the ability to work with colleagues in settings in which collective decision making is the order of the day."
- Using board members' time well so that they can focus their limited bandwidth on debating issues of substance. This means ensuring that serving on committees does not take up too much of board members' time, assembling materials in advance so board members can read them properly, and framing issues for discussion and then action by the board.
- On establishing agendas, Bowen's suggestion is that each director/trustee "make a list of critical issues that he or she believes will need to be confronted in the course of a year. These lists can then be consolidated, agreement reached on central topics and plans made to cover the topics in an orderly way."
- In the non-profit sector where there are no market signals and feedback to warn of poor performance, "directors and trustees need to [have the courage and the will to act] to raise the most challenging questions - the ones that no one may want to hear - and then pursue them relentlessly until satisfactory answers are in hand…[with] declining revenues, falling enrollments or declining attendance, fund-raising shortfalls, and shrinking endowments…[being] important indicators of trouble".
- Putting in place well designed mechanisms to give independent directors the opportunity to nominate and replace colleagues, influence board agendas, participate actively in setting strategic directions, monitor the performance of management, handle conflict issues, address any compliance matters, and discuss candidly both the leadership provided by the CEO and their own stewardship." Essentially investing the effort to put in place the processes to allow board members to focus on substance.
Reading this book made me reflect more deeply on my own experiences serving on boards and what might have been done differently. 4 stars for an accessibly written book filled with real life examples and practical advice.
Bowen served on boards for both for-profit organisations such as Amex and Merck and nonprofit organisations such as the Smithsonian Institution and the Sloan Foundation; as a former President of Princeton University, he also worked closely with the university's board of trustees. His book therefore focusses primarily on large, publicly owned and wider traded for profit corporations (as opposed to private companies, which have a different operating context), and on service-providing, grant seeking nonprofits, including colleges and universities (and excluding non profits such as labour unions and trade associations and to a certain extent, grantmakers). It is also very much situated in the American context. Nonetheless, there are valuable lessons to be drawn from the book, even if one's organisational context is quite different from those discussed by Bowen.
So what exactly is the role of a board member? Bowen notes that their job is "by no means only to help organisations avoid serious missteps; they also need to be proactive partners in working with the CEO/president to achieve highly positive outcomes…A properly functioning board provides checks and balances by adding layers of judgment and protections against abuse of power [by the "aspiring autocrat"], self-dealing, favouritism, and just plain foolishness. More positively, the existence of a board encourages the development of a shared sense of institutional purpose and an awareness of the broader social, economic and political context within which decisions are made. Nonresident directors and trustees can approach issues from a broader and more disinterested vantage point than can those immersed in day-to-day responsibilities. They can bring fresh perspectives to bear on tough questions at the same time that they can testify to outside constituencies on behalf of a company or a college. In both for-profit and non-profit sectors, boards can serve as valuable connectors between the work of a specific company or social service provider and the external world that conditions the success or failure of the organisation in so many ways…contribut[ing] substantive ideas or rais[ing] big warning flags". In particular, where the organisation is small and lacks a depth of staff expertise, boards can be an invaluable resource.
Specifically, Bowen summarises a board's role into the following 8 points:
1. Select, encourage, advise, evaluate, compensate, and, if need be, replace the CEO
2. Discuss, review, and approve strategic directions: Boards have an obligation to take a long-term view and "to resist any tendency to place excessive emphasis on short-term considerations". Indeed, given that most organisations have a tendency to focus on immediate priorities and tasks, having the board provide that focus on the long-term is invaluable. Bowen cautions, however, that boards cannot confuse "participation in the direction-setting process with actual policy making…Rather, they raise questions [which are almost never purely financial in nature], debate policy choices, and eventually adopt or reject recommendations brough to them by the president or CEO."
3. Monitor performance: Here, with reference to the non profit world, Bowen observes that "it is surprising how frequently no real planning occurs…and it is even more surprising how frequently plans that were not adopted are not tracked in even the most rudimentary fashion." He does acknowledge that the monitoring task in the non profit sector is complicated by conceptual issues such as what are the most important outcomes to measure, and how can they be measured".
4. Ensure that the organisation operates responsibly as well as effectively: This is about having proper policies and procedures for compliance with legal and ethical standards, and proper controls to monitor expenses, etc.
5. Act on specific policy recommendations and mobilise support for decisions taken.
6. Provide a buffer for the CEO, i.e. "take some of the heat".
7. Ensure that the necessary resources, both human and financial, will be available to pursue the organisation's strategies and achieve its objectives. This includes getting to know officers other than the CEO, and being visible at ceremonial events and large-scale, quasi-public, managerial meetings - "just showing up".
8. Nominate suitable candidates for election to the board, and establish and carry out an effective system of governance at the board level.
Being more interested in non-profit boards, I paid closer attention to the bits that related to these organisations and those more relevant for my operating context. For instance, the notion that unlike the boards of for profit organisations, which focus on enhancing shareholder values, non-profits should focus on what Bowen (citing Kevin Guthrie) terms "maximum return on mission". This is not a trivial endeavour, given the conceptual issues mentioned above.
I skimmed chapter 2 on Board Leadership, which debates whether the CEO and Chairman role should be combined or kept separate (Bowen leans towards the latter); chapter 3 on Compensating the CEO; chapter 4 on Evaluating and Replacing the CEO; Chapter 5 on CEO Transitions. Chapters 6 on Building the Board, and Chapter 7 on Board Machinery were probably the most useful in this respect.
So what are some of the practices and disciplines that non-profits should have in place, including drawing inspiration from those characteristic of corporate boards? Some of the things Bowen highlights include:
- The routine use of benchmark data
- The constant monitoring of discrepancies between planned outcomes and actual results
- Selecting good board members and aligning them with the role of board member and the mission of the organisation is critical; Bowen suggests developing a matrix that lists the organisation's ongoing needs, the gaps created by retiring board members and consulting this when doing board recruitment and succession planning. Equally important is building a sense of "real group cohesion, interaction, debate and collegiality". How might organisations create opportunities for board members to build a sense of cohesion, to enjoy working together? As such, more important than credentials are "a demonstrated history of accomplishments in whatever the field [a track record of actually getting stuff done]…and possess[ing] the ability to work with colleagues in settings in which collective decision making is the order of the day."
- Using board members' time well so that they can focus their limited bandwidth on debating issues of substance. This means ensuring that serving on committees does not take up too much of board members' time, assembling materials in advance so board members can read them properly, and framing issues for discussion and then action by the board.
- On establishing agendas, Bowen's suggestion is that each director/trustee "make a list of critical issues that he or she believes will need to be confronted in the course of a year. These lists can then be consolidated, agreement reached on central topics and plans made to cover the topics in an orderly way."
- In the non-profit sector where there are no market signals and feedback to warn of poor performance, "directors and trustees need to [have the courage and the will to act] to raise the most challenging questions - the ones that no one may want to hear - and then pursue them relentlessly until satisfactory answers are in hand…[with] declining revenues, falling enrollments or declining attendance, fund-raising shortfalls, and shrinking endowments…[being] important indicators of trouble".
- Putting in place well designed mechanisms to give independent directors the opportunity to nominate and replace colleagues, influence board agendas, participate actively in setting strategic directions, monitor the performance of management, handle conflict issues, address any compliance matters, and discuss candidly both the leadership provided by the CEO and their own stewardship." Essentially investing the effort to put in place the processes to allow board members to focus on substance.
Reading this book made me reflect more deeply on my own experiences serving on boards and what might have been done differently. 4 stars for an accessibly written book filled with real life examples and practical advice.
This entire review has been hidden because of spoilers.
March 22, 2020
Though published at the cusp of the 2008 financial crisis after which board governance received more critical oversight, Bowen’s timeless work speaks to the essence of what it means to be a CEO/Chairman/Lead Director, the relationship between the principal and board members, CEO compensation and transitions, how boards function/operate, and the utility of committees and sessions amongst other lesser board-related topics. Bowen’s credibility to speak into the topic is unquestioned, having sat on numerous boards as well as President of Princeton. Focused primarily on public and private boards, he does speak generally of profit and not-for-profit boards and higher education boards of trustees. Filled with personal and second stories, Bowen is clear in his opinions and stances of certain aspects of board service and why he feels that way. This is the perfect primer not only for new CEOs and board chairman, but also for those who are new to board service who seek a fundamental understanding of board organization and process. My interest in boards, and now service on two, was enhanced by this work and I expect to contribute more effectively as a result of reading it and recently attending the National Association of Corporate Directors (NACDOnline.org) Battlefield to Boardroom seminar for retired/retiring flag and general officers. @NACD
June 5, 2017
A useful book to get an understanding of the role of the CEO and its board of directors. It details the models of CEO/Chairman, its functions, performance, compensation, transition and finding of suitable candidates. The same is also said for the board of directors along with the various problems it encounters and how it should be resolved.
The only issue I take up with this book is it often moves back and forth with the profit and non-profit organizations. Perhaps a tabled summary would be useful at the end of each chapter (if appropriate) to show the contrasts these types of organizations have.
Recommended book for investors who wishes to learn more about the board of directors they are used to reading in company annual reports.
The only issue I take up with this book is it often moves back and forth with the profit and non-profit organizations. Perhaps a tabled summary would be useful at the end of each chapter (if appropriate) to show the contrasts these types of organizations have.
Recommended book for investors who wishes to learn more about the board of directors they are used to reading in company annual reports.
July 31, 2022
I didn’t actually enjoy this book at a four-star level but as a foundational text for exploring boards this is THE starting point. As I go on to read more modern and context-specific articles and research about governance, I am going to very much appreciate having the background that this book provided.
May 12, 2021
It is good for what it is but more focus on for-profit than I was looking for.
October 8, 2023
This was a textbook for my master's program.
June 11, 2008
This book cannot be recommended highly enough to anyone who may serve on a for-profit or not-for-profit board. Bowen's first hand experiences are rich enough, but he complements them with wisdom from a vast social and business network of highly accomplished individuals who have confronted most imaginable challenges. Deep insights. Solid recommendations. Efficiently presented. What else could you ask for? I wish he had written it 20 years ago.
July 28, 2015
Solid read. This book dealt more with larger public companies and large non-profits than it did with smaller privately held companies. Much of the material I am sure will prove useful however in my own personal business dealings with small companies.
April 26, 2011
Didn't use this book too much for my class. But what I did read was ok.
October 15, 2015
Targeted at large company and non-profit board of director issues. I was able to glean some insight for application to small startup company circumstances.
Displaying 1 - 11 of 11 reviews