What Didn’t Work: Tongue-Tied at the Top
The regents communicated these governance reforms to congress and the public. With these steps, and with a clear focus on the future, the regents were able to quell the public outcry over Small’s excesses, attract an excellent new secretary, and put the negative publicity behind them.
THE BETTER PATH
At American University and the Smithsonian Institution, similar governance missteps avalanched into full-blown crises. In the absence of board-wide discussions, board members assumed that other, more senior members were keeping an eye on executives. Management also conspired to keep trustees in the dark about important decisions regarding compensation and expenses by controlling the input of external sources. And board dynamics—ruled by contention at American University and excessive efficiency at the Smithsonian discouraged open, honest discussions. This thick brew of weaknesses enabled the leaders of both institutions to live larger than they should have, and to do so longer than they should have.
