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Michael Ruettgers
  Michael Ruettgers
 

Engaged Board of Directors Can Help a Corporation Grow

4/17/2006 --

Retired EMC chairman encourages proactive corporate governance.

ANN ARBOR, Mich.—A board of directors that is actively involved in setting goals and shaping strategy can lead a company into successful growth opportunities, says Michael Ruettgers, special adviser and retired chairman at EMC Corp.

Ruettgers spoke about "The Role of the Board in Growth" at a recent Dean's Seminar at the Stephen M. Ross School of Business at the University of Michigan. Ruettgers served as CEO at EMC from 1992 to 2001 and was named one of BusinessWeek's "World's Top 25 Executives." He became executive chairman of EMC, a world leader in products, services and solutions for information management and storage, in 2001.

The information technology industry is characterized by constant disruptive technologies, volatile product life cycles and a highly competitive marketplace. To survive and prosper in this environment, companies need to aggressively pursue growth opportunities through innovative product development.

Growth is usually at the top of the CEO’s agenda, Ruettgers said. Growth opportunities also should be the top priority for the board of directors.

"The board owns the strategy," Ruettgers said. Members need to understand the industry life cycle, oversee long-term strategy, and most important, set and communicate aggressive growth targets.

They also should review the organizational structure and influence the selection of top management. "Board members are going to be there longer than the CEO," Ruettgers said. The average tenure for CEOs today is three years and for board members it is eight years.

The passage of the Sarbanes-Oxley Act in 2002 changed the role of board members, Ruettgers said. Previously, being a board member was considered a cushy job that involved short quarterly meetings. Today's expectations and requirements are higher for board members so companies can meet new standards of corporate responsibility and greater financial disclosure.

"The board is a real organization, not a bunch of individuals," Ruettgers said. The most successful board work is done in committees. These include the traditional audit, compensation and corporate governance committees, and now further extend into mergers, acquisitions and stock repurchasing.

Traits that make a strong board include the ability to contribute to strategic decision-making, experience that matches strategic priorities of the firm, a climate of trust and openness, constructive dissent, individual accountability and periodic performance evaluations.

"Growth is everyone's business," Ruettgers concluded.



For more information, contact:
Adrienne Losh
Phone: (734) 615-5068
E-mail: alosh@umich.edu