Separating CEO From Board of Directors’ Chairmanship Shouldn’t Be Mandatory

In the world of corporate governance, American companies espouse certain managerial practices found almost nowhere else in developed economies. A prime example of this disparity lies with the dual roles of Chairman of the Board of Directors and Chief Executive Officer (CEO) often being bestowed upon a single individual. As The Economist magazine recently reported, a Norwegian pension fund operator is encouraging certain US companies to separate the roles, but doing so does not necessarily enhance an organization’s corporate governance. The Economist’s article, which appeared in its Schumpeter column, notes that some 30 academic studies produced over the last 20 years have failed to show that either combining or separating the roles has any meaningful impact on an organization’s management. Instead, the decision should be made on an individual basis, selecting the most-appropriate option for a particular company’s circumstances. Nonetheless, some members of Congress would rather see the roles separated at all US companies, and a “Shareholder’s Bill of Rights” introduced by New York Senator Charles Schumer would do just that. Opponents of the measure fear that forcing all corporations to separate the roles may place an undue burden on smaller entities and could lead to internal disagreements and managerial gridlock if the individuals appointed to the two roles cannot work together. Rather than requiring all companies to split the duties of CEO and Chairman of the Board of Directors, Congress should require that corporations justify their decisions to either combine or separate the positions.

The Shareholder’s Bill of Rights Act of 2009, Senate Bill 1074, was introduced on May 19, 2009 and referred to the Committee on Banking, Housing, and Urban Affairs, where no further action has been taken.

Carol Bartz on Management, Eliminating Annual Reviews

In an interview for The New York Times‘ Corner Office, Yahoo CEO Carol Bartz discusses her management style and dislike of the annual review. As I’ve written about here before, managing the upcoming generation of workers will require a different set of skills than managers needed for previous generations, particularly the ability to give regular feedback. From her interview with the Times, it is apparent Ms. Bartz understands the changing managerial landscape the Millennial generation will bring and how her company must respond.

Wal-Mart’s International Ambitions Reveal Retailer’s Flexibility

As Matthew Boyle writes for Business Week in “Wal-Mart’s Painful Lessons,” the company’s international expansion has faced immense challenges at nearly every stage, and the numerous difficulties the retailer has encountered reveal how a massive organization can retain its flexibility. While Wal-Mart’s US growth has not been without its difficulties (recall opposition in Vermont, or more recently, Orange County, VA), its domestic challenges provide valuable experience as it expands into countries such as Japan, Russia, India, and Chile. Mr. Boyle’s article is extensive and well-worth reading, but below are some highlights:
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Business Consultant Provides Tips for Becoming a Better Boss

Friday was National Bosses Day and in honor of this auspicious day, Francine Dalton, president of Maryland-based consultancy Dalton Alliances, Inc., provided 13 essential tips for becoming a better boss. Ms. Dalton’s satirical commemoration of Friday’s holiday is essential reading for staff and management alike.

On an unrelated note, is there anything that doesn’t have its own day at this point?

Starbucks Borrows ‘Lean’ Page from Toyota

As The Wall Street Journal reports in “Latest Starbucks Buzzword: ‘Lean’ Japanese Techniques,” the coffee giant is adopting one of the auto giant’s most successful management practices as it combats the economic downturn. In lean manufacturing (known as the Toyota Production System until the 1990’s), any activity that doesn’t ultimately add to the value of the product is wasteful. This can be anything from moving a part around a factory excessively to locating various production processes inconvenient distances from each other.

In the case of Starbucks, waste takes the form of excessive moves about the store, waiting for timers to expire or brewers to finish, and lifting items from under-counter storage. Even the barista who once stood guard behind the pastry case, awaiting only pastry orders and taunting the coffee purchasers, has been eliminated. Speaking from personal experience, I never much saw the point of having a barista perform such a limited task, even when I did order food with my caffeinated creation. The company is even hoping that decreasing the distance a barista moves for the various components of a drink will increase productivity and reduce the number of baristas needed for each shift. But, given how little a barista moves from the espresso machine now (with exceptions, of course—see below for how this is changing), I wonder how much efficiency the company can find there. Nonetheless, if you’ve been in a store lately, you may have noticed some of the changes without realizing it.

As I mentioned, gone is the barista at the pastry case, generally. Lately, I’ve noticed that the barista making iced teas and Frappuccinos is largely responsible for toasting items as needed. Otherwise, the barista ringing up the orders is pulling pastry items from the case. This seems to free the barista at the espresso machine to focus on those drinks. I’ve also noticed containers for bulk ground coffee are now located next to the brewers, rather than below them, along with filters. Undoubtedly, items have moved behind the espresso machines, but I haven’t noticed anything so far. However, the new espresso machines, which the company is rolling out now, hold more beans and give the baristas more control over shot length and steaming, so presumably that should equal more efficiency by way of less wasted milk, espresso, and ultimately, time.

As a customer, I have to say that the few changes I’ve noticed are for the better. I can’t speak to how these changes have affected peak times or the bottom line, but if the company is confident enough to implement lean procedures in its 11,000 stores, something must be working.

Maybe with all the money the company is saving on this efficiency, it can work on putting together some better pairings. After all, I need more than a tall beverage in the morning.