Abdication of control by company directors
Other Names: Irresponsible directors of commercial enterprises
Incidence: A survey of company directors in the USA found that they were confused about their role, dependent on a company's chief executive for information, and crippled by social conventions inhibiting probing inquiry. Outside directors seldom exercise control over a company's management until a crisis strikes and then they are often paralyzed by indecision. A principal reason for not challenging a company's chief executive is that so many of the directors are themselves chief executives (63% of all outside directors of the Fortune list of 1,000 largest American companies are chief executives of other companies). Directors are further inhibited from fulfilling their responsibilities by lack of time and resources, since the average outside director only spends 14 days per year with the company.
Problem Type: E: Emanations of other problems
Date of last update 01.01.2000 – 00:00 CET