1015
n
Liaisons and intrigues
calls returned, would be denied any further personal meetings,
and sure as hell were not given the phone number of the CEO’s
golng buddies. And the only advice they ever received was
to get a life and bend their bodies in ways that would enable
self-fertilization.
And this worked too (not the self-fertilization bit, but the social
punishment). Other analysts aware of their colleagues’ plight
and loss of status would be sure to not follow them into the
social abyss; they were unlikely to downgrade the rm of the
proven-to-be-vindictive CEO. Thus, analysts let themselves be
signicantly inuenced by the CEOs of the companies they were
supposed to rate objectively.
And what might CEOs pick up from this? Well, all in all, it shows
that sweet-talking works. But mostly if followed by a good dose
of old-fashioned bullying.
Advice or influence? Why firms ask government
officials to be directors
Let’s face it; outside directors are a strange phenomenon in
our global economy. Analysts may be peculiar, but boards of
directors certainly seem to be a governance construction that
is stranger than ction. Because they are a bunch of amateurs
and part-timers. Literally. Sometimes these directors are not
even business people, but unionists or politicians. Moreover,
the supervision of the management of a globally diversied
company is just something they do on the side a couple of
days per year or so. Often they are CEOs of other companies
so that might help a bit (or harm a bit . . .) but typically these
guys have about half a dozen of these gigs. So, they can’t let any
single one of them distract them too much.
It is a bit like we manage our own personal nances – paying bills
and ling bank statements and so forth. In the evening, after a
hard day’s work, while watching X Factor, we quickly glance over
the nancials and put our signature on the most necessary evils
before making a cup of coffee and turning our attention to the
Business Exposed102
newspaper. Bills, bank statements, the accounts of a multina-
tional; what’s the difference really?
But, as I said, not all outside directors are (ex-)CEOs. Quite
often, companies also invite ex-government ofcials to serve on
their boards. The reasons for that, as research has indicated, are
not hard to fathom: they can provide advice, but they can also
provide inuence. I guess there’s nothing wrong with buying
advice, but the idea of buying inuence might be a bit more
morally challenged . . .
Government ofcials can provide specic advice on how to deal
with government-related issues. They have specic knowledge
and experience and can therefore provide valuable advice. But
ex-ofcials can also offer contacts for communication that are
not accessible to other companies. Then, directorships start to
become the currency used to buy inuence, which makes it a bit
more dubious. It certainly gets dubious if they provide a direct
way to inuence political decisions. Some people have even
suggested that board memberships for ex-government ofcials
are rewards for services rendered while they were in government
. . . which would certainly be in the “barely legal” category.
It’s hard to examine which of the aforementioned reasons
motivates rms to invite ex-government ofcials on to their
board: the legal ones (e.g., specialist advice) or the barely
legal ones (inuence and rewards for past services). However,
by analyzing which individuals are offered the job, we can
get a sense of what’s going on. Professor Richard Lester from
Texas A&M University and some of his colleagues analyzed
this question: which government ofcials are most likely to
be approached to serve on a board? Using data from the US,
they tracked all senators, congressmen, and presidential cabinet
ministers who left ofce between 1988 and 2003 and gured out
which of them were offered directorships.
They found that the longer ofcials had served in government,
the more likely they were to be approached for a directorship. I
guess that could be because more experience gives them more
inuence, but also because experience made them better advisors.
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