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Management article
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Reference no. 95107
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1995

Abstract

If the 1980s were the decade when the movement to empower U.S. factory and office workers took root, the 1990s are the decade when empowerment is sweeping corporate boardrooms. Empowerment means that outside directors have the capability and independence to monitor the performance of top management and the company; to influence management to change the strategic direction of the company if its performance does not meet the board''s expectations; and, in the most extreme cases, to change corporate leadership. Because the chief executive is also the board chair in more than 80% of the country''s publicly held corporations, most CEOs view board empowerment with trepidation. But, Jay Lorsch argues, if CEOs resist the trend, they and their companies will be the losers because the empowered board is here to stay. What is required is a new form of teamwork in which directors and senior managers understand one another''s roles and collaborate effectively to achieve corporate success.

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Abstract

If the 1980s were the decade when the movement to empower U.S. factory and office workers took root, the 1990s are the decade when empowerment is sweeping corporate boardrooms. Empowerment means that outside directors have the capability and independence to monitor the performance of top management and the company; to influence management to change the strategic direction of the company if its performance does not meet the board''s expectations; and, in the most extreme cases, to change corporate leadership. Because the chief executive is also the board chair in more than 80% of the country''s publicly held corporations, most CEOs view board empowerment with trepidation. But, Jay Lorsch argues, if CEOs resist the trend, they and their companies will be the losers because the empowered board is here to stay. What is required is a new form of teamwork in which directors and senior managers understand one another''s roles and collaborate effectively to achieve corporate success.

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