It's a basic corporate concept: Management is supposed to look after short-term issues and day-to-day operation of the company while the board of directors takes care of strategy and long-term issues.
That hasn't been the case recently.
The Sarbanes-Oxley Act, which has tough standards of accountability, and a rash of corporate scandals uncovered and prosecuted by the Bush administration have diverted the attention of many outside directors, forcing them to deal with operational problems.
For example, it was Delphi's board that expressed a lack of confidence in CFO Alan Dawes and ousted him over accounting issues.
Obviously, fraud and other illegal activities must be stopped. And if a company's financial staff, controller and outside auditor are lax, it's up to the board to make things right.
But directors want to get back to their traditional role.
The well-known consulting firm McKinsey & Co. recently surveyed 1,000 corporate directors and the results are telling.
According to McKinsey, directors want to be more active in three crucial areas:
McKinsey found that directors want to spend a lot less time on auditing, compliance and the compensation of top managers.
When you look around the auto industry -- mostly meaning the automakers, big suppliers and public dealership groups -- you'd think their directors would be deeply engrossed in the three crucial areas, considering all of the challenges they face.
But the Delphi situation means instead of using their collective expertise to help set strategy, directors at several of the industry's biggest companies will be asking questions they didn't think they needed to ask and scrutinizing things they had only glanced at before.
That's unfortunate. Now, more than ever, automakers and suppliers need to pay attention to long-term strategy and they need their directors' eye on the long ball.
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