View source for Disaster in the Boardroom: Six Dysfunctions Everyone Should Understand by Gerry Brown and Randall S Peterson

{{infobox1
|title=Disaster in the Boardroom: Six Dysfunctions Everyone Should Understand
|author=Gerry Brown and Randall S Peterson
|reviewer=Sue Magee
|genre=Business and Finance
|summary=You might wonder why it's essential that we all understand what can go wrong in a boardroom - but the effects of dysfunction can be catastrophic.  The subject might sound dry but the book is lively and engaging.  Highly recommended. Gerry Brown and Randall S Peterson popped into Bookbag Towers to [[The Interview: Bookbag Talks To Gerry Brown and Randall S Peterson about Disaster in the Boardroom: Six Dysfunctions Everyone Should Understand|chat to us]].
|rating=5
|buy=Yes
|borrow=Yes
|pages=306
|publisher=Palgrave Macmillan
|date=February 2022
|isbn=978-3030916572
|website=https://theindependentdirector.co.uk/
|video=Kxwcci4beGY
|cover=303091657X
|aznuk=303091657X
|aznus=303091657X
}}
Boards must act in the best interests of their stakeholders and ensure that they are well-managed and financially secure.  This might seem obvious but a series of disasters - some of which have resulted in death or the collapse of a major company - have left interested parties asking what the board was doing.  Where were they?  Occasionally the boards were unaware of what was happening or they preferred to turn a blind eye, leaving watchers wondering which was worse - ignorance or criminality.  The 21st century has delivered some major company scandals but what has happened is nothing new: Gerry Brown and Randall S Peterson give us a very readable trip through such major debacles as railway mania, the South Sea Bubble and even tulip mania.  Over three centuries we seem to have learned very little.

''When the tide recedes you discover who has been swimming naked''.

It's easy to assume that collapses such as Enron and Lehman Brothers are outliers but research suggests otherwise.  It's estimated that some 40% of corporate boards are dysfunctional in some way.  The cost of failure is not limited to the effect on the share price: it's borne by all of us.  There's the effect on the individual who loses his job, the local communities that find unemployment is widespread and the pension funds whose value dips.  It's a social and moral problem rather than just economic.

Is regulation the answer?  Superficially, it might appear to solve the problem but penalties come 'after the fact': the damage has been done.  The front line responsibility must rest with the board, but the board doesn't run the company - that's the job of the executive.  The board must hold the CEO to account - and this is the nub of the problem.  Brown and Peterson outline the six dysfunctions preventing boards from doing their jobs.  They can be distended, subordinated, imbalanced, bystanders, bureaucratic or conforming.  Each dysfunction is explained, explored and then illustrated in what amounts to some splendid storytelling.  I read this section - and then I went back and reread it because it's so good.  The companies used for illustrative purposes aren't anonymous entities: they're big corporations and names are named.  I'm not going to give quotes: you really should read the book to get the full impact.  I can promise you won't regret it, particularly if you really want to know what went on at Facebook, Google, Carillion, Uber, BP and RBS.  Should the auditors have been more proactive?  Well, you can read about The Big Four, too.

Gone are the days when being an independent director was a comfortable job for the retired white male who attended board meetings four times a year and had a free lunch.  Now indies require the ''mindset, experience, knowledge and skills to ask the important questions.''  Brown and Peterson advocate better (and continuing) education for directors and chairs.  I was particularly impressed by the appointment letter from a highly respected FT-100 board chair which sets out how a director should act.
In considering each dysfunction - and remember, it's not unusual for a board to suffer from several - Brown and Peterson give a series of red flags.  They're warnings that you really shouldn't ignore and when these are taken in conjunction with the Directors' Checklist in Appendix B there is no excuse for a claim of ignorance or a blind eye being turned.

I judge a book by the number of notes I make as I read and also by how often I find myself reading excerpts to anyone who'll listen.  ''Disasters in the Boardroom'' scores highly on both counts.  I'd like to thank the publishers for sending a copy to the Bookbag.

If you're considering becoming an independent director, Gerry Brown should be your go-to author.  We can recommend the following books which he's written or co-authored:

[[The Independent Director in Society: Our current crisis of governance and what to do by Gerry Brown, Andrew Kakabadse and Filipe Morais]]<br>
[[The Independent Director: The Non-Executive Director's Guide to Effective Board Presence by Gerry Brown]]<br>
[[Making a Difference: Leadership, Change and Giving Back the Independent Director Way by Gerry Brown]]

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{{interviewtext|author=Gerry Brown and Randall S Peterson about Disaster in the Boardroom: Six Dysfunctions Everyone Should Understand}}

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{{comment
|name=Peter
|verb=said
|comment=Essential reading for independent directors and anyone aspiring to become one.  I was particularly interested in the case studies which illustrated precisely why checks and balances need to be applied to prevent disasters (such as Royal Bank of Scotland) occurring in the future.
}}

[[Category:Gerry Brown]] [[Category:Randall S Peterson]]