The article examines how boards can better hold CEOs accountable for poor performance by incorporating principles from the military. Analysis of 865 U.S.-listed manufacturing firms revealed that boards with military-experienced directors are more likely to take decisive action, including dismissing underperforming CEOs. This contrasts with the usual hesitancy seen in boards, where extended debates often sidestep necessary accountability measures. The authors advocate that any board can benefit from adopting military accountability strategies to effectively oversee their CEOs and respond to underperformance.
In addressing CEO underperformance, boards with directors who have military experience are more decisive, opting to dismiss the CEO when necessary.
When a company struggles, there's heightened expectation for the CEO to resolve issues or face removal, which creates pressure on the board.
Military principles offer an often-overlooked source of accountability, which can help boards effectively oversee their CEO's performance and enforce accountability.
Despite the pressures for change, many boards engage in prolonged debates instead of decisive actions, leading to prolonged underperformance.
#ceo-accountability #corporate-governance #board-dynamics #military-experience #performance-management
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