“What does corporate governance look like in your organization? Is the governance of your organization effective, or not? What governance challenges does your organization currently experience? Describe your experience, both good and/or bad, with corporate governance.”
Purpose: To discuss the role of the Board of Directors in the Strategy Formulation and Strategy Execution process.
Required materials on this assignment include Gamble, Chapter 2 in the textbook, pages 30-32, and the Paine article (COVID-19 is Rewriting the Rules) from Harvard Business Review. Additional outside articles, properly cited in APA, are also acceptable. Please review the example posting below before attempting this assignment.
org/2020/10/covid-19-is-rewriting-the-rules-of-corporate-governance”>https://hbr.org/2020/10/covid-19-is-rewriting-the-…
https://hbr.org/2021/03/how-to-create-a-winning-po…
Example: Board of Directors acts to remove Boeing CEO Muilenburg
One of the four main tasks of a company’s Board of Directors is to “Evaluate the caliber of senior executives’ strategy formulation and strategy execution skills” (Gamble 2019, pp. 30). The Board of Directors serves as the oversight function for the management of the corporation. In a crisis, the actions of a company’s Board can be decisive, either for good or bad. Further, having the right management in place for a company is probably the most important task for a company’s Board of Directors.
At Boeing, a crisis over the grounding of all 737 MAX airplanes worldwide ultimately led to the ouster of Chief Executive Officer (CEO) Dennis Muilenburg (Tangel & Cameron, 2019). He was replaced by David Calhoun, a member of Boeing’s Board of Directors. Critically, Muilenburg learned of his firing from Mr. Calhoun and another member of Boeing’s Board of Directors (ibid). Muilenburg was widely criticized regarding his handling of the Boeing 737 MAX crisis.
The crisis at Boeing and the ouster of CEO Muilenburg opens several relevant issues regarding corporate governance. First, did Boeing’s Board of Directors adequately oversee the company’s direction and strategy? Other breakdowns in governance, such as at Volkswagen in 2015, have been well documented (Gamble, 2019, pp. 31). Next, did CEO Muilenburg give the Board enough information prior to the crisis to make sound decisions? Sometimes, firm CEOs do not tell Boards of Directors what they need to know. Boards need to be able to ask tough questions of the CEO.
Calhoun had no time to stabilize the 737 MAX crisis at Boeing; the COVID-19 pandemic in 2020 grounded approximately 90% of all commercial flights worldwide in 2020. This severely affected demand for Boeing aircraft. A critical decision for Boeing at that time was whether to continue their dividend (Paine, 2020). Boeing was drawn into the global crisis by weight of their position in the aircraft industry. There was no way around the conclusion that they were responsible to their stakeholders, such as their parts suppliers, during the crisis (Paine, 2020). The collapse of a parts supplier could have potentially forced Boeing into bankruptcy as well. Paine (2020) discusses this broader vision for corporate boards and concludes that it is inevitable that companies must understand and embrace the broader impact their operations have on their stakeholders. Shareholders are important, but they are not the only stakeholder in our corporations (Paine, 2020).
0 comments