Chief Executive Officers (CEOs) say it's tough to get advice they can trust.
Consultants tend to be abstract and concerned with keeping their contracts, they say. Lower-level executives are too deferential. Friends often don't have the business experience. So as pressure builds from activist shareholders, fast-moving competitors or stricter boards, chief executives are increasingly banding together in formal peer groups.
These executives typically run small, closely held companies. But heads of big public companies also join in. Leaders of publicly traded companies say they often turn to peers with issues too small or unformed to raise with a board of directors. In an era of increasingly arm's-length relationships between boards and CEOs, top executives say they also use the sessions to talk about their directors.
The companies that run the peer meetings typically make participants sign nondisclosure agreements. Such peer groups typically meet for a half or full day each month. Some executives say it's not worth the commitment. After seven years in a group, Barry Shames, owner of a construction company in Livermore, CA, says he wasn't getting much new management advice. "It got a little stagnant," he says. Though he quit, he says he continues to confer with some of the executives he met.
Source: The Wall Street Journal, July 26, 2007