The deadliest eight words in business are, “This is the way we’ve always done it.” Or so the saying goes. That truism applies to all areas of the modern company, including corporate governance.
That was the thinking behind Rajiv L. Gupta’s recent address to Broad College of Business MBA students recently in the final Pung Executive Speaker Series fireside chat of the 2017–18 school year, hosted by Dean Sanjay Gupta.
The focus of the chat was on boards of directors’ responsibilities and the evolution of those responsibilities over time.
Rajiv Gupta is the former CEO of Rohm and Haas (now part of Dow Chemical Company) and director in several companies, including Delphi Automotive and Vanguard Group. He is currently a senior advisor to New Mountain Capital, a private equity firm. He is author of a book, My American Journey: Eight Dollars and a Dream, and once served as chairman of the American Chemistry Council.
“As the digital revolution transforms every aspect of our lives – from how we create and consume products and services, to how we communicate, entertain, and relate to one another – the implications for chief executives and boards of directors are almost immeasurable,” Rajiv Gupta recently wrote. “This comes as public trust in ‘big business,’ according to a 2016 Gallup Poll, is ranked near the bottom of all public institutions, even below the news media and just edging out Congress!”
“Given the lack of public trust due to the financial crisis and the way technology is shifting the employment environment, this is not too hard to understand,” Rajiv Gupta wrote. “What is clear, is that corporate governance must evolve to reflect these rapid and profound economic and societal changes that are happening by the moment.”
To stay ahead of change, Rajiv Gupta suggests that boards should:
- Carefully select a CEO, and plan and assure an orderly CEO succession;
- Actively engage with strategy development;
- Identify risks and develop mitigation plans;
- Reach out to shareholders;
- Link pay to ethical performance and acting in shareholders’ best interests;
- Align investors, directors, and management on critical issues.
Other Pung lecturers this academic year included Del Monte Foods CEO Greg Longstreet (BA Business ’92), Tenneco Inc. CEO Brian Kesseler (BA Finance ’88), Phillips-Medisize CEO Matthew Jennings (FTMBA ’88), and Salesforce.com President and CFO Mark Hawkins (BA Supply Chain Management ’81).
The Roy S. Pung Executive Speaker Series, sponsored by an endowment created by retailers in the photographic and imaging industry, honors the industry trade association’s long-time executive director, Roy S. Pung.