business strategy | October 17, 2012

Boardroom Myths: Business Speaker Justin Fox Says Insiders Don't Need To Be Thrown Out

"Corporate governance is all about balancing diverse, sometimes conflicting priorities and interests," business speaker Justin Fox writes in The Harvard Business Review, "which is why seemingly simple, straightforward attempts to improve it so often backfire." Aptly titled "Throwing Out Insiders Won't Fix Corporate Boards," Fox argues that simply forcing insiders out of their spots on corporate boards of directors won't ensure good-governance of a corporation. Seemingly, it would make sense not to allow CEO's and CFO's to sit on the boards where they have a vested, and personal, interest in controlling all aspects of the company's activity. However, Fox says there is a great deal of evidence that contradicts that. He also says that this "anti-insider" movement (where many corporations are taking management out of the boardroom) in corporate governance has stemmed from, "a persistent misconception about what the role of a board of directors is."

The board, he says, is actually responsible to the corporation, and not, as is commonly believed, to the shareholders. Because of this, Fox argues that it's not necessarily a conflict of interest for leaders of a corporation to sit on the board, nor does it mean that the board won't run as efficiently if they remain in that role. "Throwing insiders off of boards is simple," Fox argues, "putting together a truly effective board is hard."  

In the article, Fox, the editorial director of The Harvard Business Review, combines his years of experience in economics and business with a balanced blend of well-crafted research and trusted outside opinion. Similar to his bestselling book The Myth of the Rational Market, he is able to make complex business and economics principles accessible to the masses. In his writing, media appearances and enlightening talks, Fox presents sound insights on hot topic issues that keep his audiences both up-to-speed and on-their-toes.

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