High Flier – Ambassador Barbara Barrett
Originally published to NACD. Former Ambassador Barbara McConnell Barrett has repeatedly answered the call to play a leadership role for her…
What was it like working for Ronald Reagan?
Unlike so many candidates today, he had this incredibly diverse background that included being a labor union leader, a Democrat and working for GE for a number of years. That was part of what made him so effective and gave him such credibility with the rank and file.
Did you get to see President Reagan’s instinct for seeing the big picture?
Absolutely. As a leader he set the strategy—strong defense, minimal government intrusion, free enterprise—and communicated it so effectively that everyone understood. Then he was the chief of HR, able to attract good people to work for him who could make those priorities happen.
What would he say about our rampant growth in regulation?
His biggest concern would be the unintended consequences. For example, under Sarbanes-Oxley, the rule is that the CEO certifies that the financials are accurate, which sounds fine on paper. But in a complex organization you cannot know that everything in every document is absolutely certain. And worse, if it turns out you were wrong, there are now criminal penalties and you can go to jail. CEOs of public companies are being held responsible for accuracy that CEOs cannot control.
So we now have different standards for business-related cases?
When I studied law the idea was there’s a mens rea required for a criminal charge, that you’d have to have a conscious intent to commit a crime. But in business—for example in environmental law now, and under Sarbanes-Oxley—you don’t need intention. There is imputed intent, and if guilty, there are criminal sanctions.
In civil courts, are you worried about the growth of litigation and liability?
Absolutely. When I was a director of Piper Aircraft, we were sued for damages by a pilot who took out the seat, put in a lawn chair, took off on an airport runway that was closed and crashed. This somehow was seen as the fault of the aircraft manufacturer. Regulation such as we have today would require a warning sign, “Using lawn chairs when piloting this aircraft could be dangerous to your health.”
Many directors feel the law is co-opted by politics and the plaintiff bar.
There are facts that are not debatable. Trial lawyers are significant donors to the Democratic Party and they have very good access to legislators. America votes that party in every now and then. When that party is in, trial lawyers do really well. There is also a judicial corollary, for instance—judges can be appointed or their re-election campaigns can be bulging with contributions because a judge’s verdicts are reliably anti-business.
What factors do you look for in a healthy board-management relationship?
I think number one is candor, and it works both ways. I would like to see a board that discusses issues straightforwardly, where you convey concerns before they become monstrous.
Is there a fine line between being independent and being divisive?
The board’s first priority is to be truly independent in spirit. This is more than just holding executive sessions—it means bringing in third-party experts to discuss an issue even when that may be unpopular with management. And ask enough questions so that you have an unshakeable sense of confidence in the outcome. I don’t worry much about collegiality because smart directors with independent judgment will bring about positive outcomes. That was even the example set by America’s founding fathers.
Do staggered board terms help or hurt?
I believe staggered three-year terms offer benefits that outweigh the risks. Today, the move to annual elections of all board members leads to short-term decision making at the expense of a long-term strategy. Longer terms would result in longer strategic horizons, and board members would not be vulnerable to losing their board seat because they made an unpopular, though prudent for the long term, decision.
What compelling board issue calls out for more attention?
Innovation. One of the statistics I thought was most compelling was something I heard several years ago—that 90 percent of Intel’s revenues for December of this year would be for products that didn’t exist in December of last year. So you’ve got to be making investments for what’s going to be happening years from now.
After all you have achieved, you were just named interim president-designate of Thunderbird.
Well, I love what I’m doing. If anything, I feel like I am the fortunate one. Taking on this role and others is my way of giving something back to this great country for allowing me to do these things.