The Impact of Board Decisions

The question of insider trading at Berkshire points out the need for boards to take their leadership role seriously; not to succumb to the temptation to actively or passively ratify senior management actions or decisions without considering their impact. J. Robert Brown Jr.’s comments highlight the importance of boards having appropriate policies, routinely enforcing them, considering the implications of potential policy or ethical violations before speaking publicly on the matter, and modifying decisions when new information or the lack of effectiveness of the current approach suggest different actions would serve the organization better. Sometimes being an effective board member demands difficult conversations around the board table so that key issues are adequately explored, even if it involves questioning the opinion of a trusted leader. After all, boards exist to provide diverse perspectives on big picture matters so that critical decisions are made with information and judgment beyond the limited insights of one person.