200 InManagersWeTrust
either of them may not be good for Procter & Gamble or eBay, Wrig-
ley, or Hershey. Each corporate situation justifies and calls for its
own governance structure and analysis. Broad credit can be given
only for governance moves that have some inherently defensible
logic, such as having the board review the CEO’s performance with-
out her being present and having independence on the audit com-
mittee.
Beyond that, these general principles are of little use. Indeed,
too much emphasis on them can be affirmatively misleading. You
can put all the governance bells and whistles you want on a board,
but if its CEO or other strong leaders lac kintegrity, you can be sure
they will neither ring nor blow.
GENERAL GOVERNANCE
While one-size-fits-all recipes of corporate governance are inapt, a
few areas justify generalizations. The most important is that active
boards engaged with the companies they serve boost corporate per-
formance. That is plain common sense, though empirical studies
confirm the intuition.^6
A key problem in all governance structures is the size of the
board. You do need a minimum number of directors to generate the
kind of thoughtful deliberateness that characterizes any effective
group of people. But above that number—which is probably as low
as six—the larger the board is, the less manageable it is. Lean is
mean in business, and there is no question that ideas and energy
move more quickly through leaner managerial structures, as Wal-
Mart proved to Sears and GE proved to Westinghouse. Smaller
boards often translate into leaner management teams down the
ranks.
A similar problem is the number of other boards on which in-
dividual directors serve. The more duties a given director undertakes
in various companies, the less effective she is likely to be on each
one. A director’s concurrent experience on two boards may add value
to both. Former U.S. Senator Sam Nunn serves on the boards of a
half dozen public companies (including GE, Coke, and Texaco), for
example, and his wor kon one may benefit the needs of the others.
But how effective is a director who serves on a dozen boards at once?
Vernon Jordan serves on nearly that many and has been criticized
for doing so. It would be a rare person whose prominence and trust-