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
golng 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
signicantly inuenced 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 diversied
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 ofcials 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 inuence. I guess there’s nothing wrong with buying
advice, but the idea of buying inuence might be a bit more
morally challenged . . .
Government ofcials can provide specic advice on how to deal
with government-related issues. They have specic knowledge
and experience and can therefore provide valuable advice. But
ex-ofcials can also offer contacts for communication that are
not accessible to other companies. Then, directorships start to
become the currency used to buy inuence, which makes it a bit
more dubious. It certainly gets dubious if they provide a direct
way to inuence political decisions. Some people have even
suggested that board memberships for ex-government ofcials
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 ofcials on to their
board: the legal ones (e.g., specialist advice) or the barely
legal ones (inuence 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 ofcials 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 ofce between 1988 and 2003 and gured out
which of them were offered directorships.
They found that the longer ofcials 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
inuence, but also because experience made them better advisors.
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