Spero Consulting

We very much enjoyed the arti­cle, As Firms Floun­der, Direc­tors Quit, in today’s (Novem­ber 21) Wall Street Jour­nal.

The title com­pletely sum­ma­rizes the con­tent: as many firms have faced finan­cial dif­fi­cul­ties, out­side direc­tors have quit because they’re “too busy” to direct the firm that they agreed to help direct before it was in such dire trouble.

A week ago Thurs­day, we wrote The Fail­ure of Boards to Direct in response to a dif­fer­ent WSJ arti­cle about Cit­i­group. We con­sider the key line of the arti­cle to be an off-​hand ref­er­ence to the fact Richard Par­sons was “one of the few Cit­i­group direc­tors with expe­ri­ence in financial services.”

One of the few! $2 tril­lion – that’s $2,000,000,000,000 – of assets and a mar­ket value of $25 bil­lion. Despite the ben­e­fi­cial gov­ern­ment sub­si­dies and guar­an­tees of many lia­bil­i­ties, that mar­ket value is barely over one per­cent of the assets at work.

So we ask: do you think that there is a rela­tion­ship between a(n at least par­tially) unqual­i­fied board of direc­tors and the prob­a­bil­ity of fac­ing finan­cial dif­fi­culty – if not out­right ruin – par­tic­u­larly dur­ing a global crisis?

If not, why not?

We do note, how­ever, if this cur­rent dis­com­fort demo­ti­vates dilet­tantes from serv­ing on other boards in the future, then maybe some good will come out of the crisis.