Review: How Boards Work by Dambisa Moyo

Zambian author, veteran board director and economist Dambisa Moyo’s latest book, How Boards Work: And How They Can Work Better in a Chaotic World, might be described as a handbook for corporate oversight.

The publisher’s summary describes the book as “a road map for how boards can steer companies through tomorrow’s challenges and ensure they thrive to benefit their employees, shareholders, and society at large.”

Moyo is perhaps best known for her blockbuster bestseller Dead Aid, an impassioned critique of the way that Western overseas development aid adversely impacts Africa and beyond by fostering dependency and fuelling corruption.

Dead Aid kick-started a career that made Moyo a superstar development economist and commentator in demand by broadcasters and conference organisers. 

Not that the book was universally acclaimed. Jeffrey Sachs, who was Moyo’s professor at Harvard University, took issue with some of the author’s research and assertions, while Bill Gates went as far as to say: “Books like that – they’re promoting evil.” 

Responding to Gates on her website, Moyo stated: “To cast aside the arguments I raised in Dead Aid at a time when we have witnessed the transformative economic success of countries like China, Brazil and India, belittles my experiences, and those of hundreds of millions of Africans.”

Amid the ruckus, Dead Aid sparked an important wider debate on the merits and risks of African countries accepting official development assistance.

How Boards Work is unlikely to stir such controversy and has more modest goals. The book reflects a much more conventional viewpoint – that, essentially, boards play an important role in corporate governance and have a crucial role to play in navigating today’s challenges. 

“I aim to demystify for current executives and employees exactly what it is their boards do, educate investors about boards’ ability to effect meaningful change – both the limits and opportunities – help policymakers and regulators better understand the trade-offs and conflicting priorities that boards face, and guide the next generation of prospective board members,” Moyo writes. 

Asleep at the wheel?

The educational mission of the book is understandable. Moyo has skin in the game with experience on many boards. She currently sits on the boards of the oil giant Chevron, publisher Condé Nast, and the industrial group, 3M. Her history includes serving as a non-executive director on the board of Barclays for almost a decade as well as stints on the boards of SABMiller, Barrick Gold and others.

She says that Barclays wanted her to join the board to bring her expertise to guide the bank as it considered its future in Africa, a region the bank had invested in for over 100 years but was considering exiting.

“It was no accident that Barclays had recruited me,” she writes. “They had deliberately searched for someone with knowledge of emerging market economics to join their board. More generally, all corporate boards benefit from meticulously cultivating the international expertise in their boardroom – that is, by attracting candidates from different parts of the world or with public policy experience.” 

However, a board’s responsibility goes much further than strategy, and this reader feels that Moyo could have offered a more pointed critique of the board misgovernance and oversight scandals that have dogged the corporate sector in recent years.

In 2012 it emerged that some of Barclays’ traders had been manipulating the Libor rate, an interest-rate average calculated from estimates submitted by the leading banks in London. Each bank estimates what it would be charged were it to borrow from other banks. A small change in either direction can earn millions for the banks and their trader’s bonus pots.

As it transpired, between 2010 (when Moyo joined the Barclays board), and 2016, (she stepped down in 2019), Barclays paid a staggering £15.2bn ($20.8bn) in misconduct fees and fines. Had the board she joined been asleep at the wheel? Moyo does not comment directly. But speaking of the wider corporate environment, she concedes that “laypeople and ordinary shareholders have seen immense wrongdoing including value destruction and scandals without any obvious repercussions for senior management or the board itself.”

That has led to increasing calls for board reform or even abolition. 

“Some argue that, even without a board, the market – in the form of customers and investors – could hold corporations accountable for operational and financial performance and guide company strategy. Furthermore, this theory holds, a combination of regulators, lawyers, and accountants sets guardrails and keeps the company operating strictly within the law. Some combination of excellent recruitment firms and consultants would be more than able to pick a CEO and evaluate their performance without the formalities of a board. 

“This view of corporate boards as obsolete and other negative perceptions should not be dismissed out of hand.”

Formidable challenges

Yet despite outlining the concerns of board opponents, her own outlook on the corporate sector as a whole is generous and her solutions relatively conventional. 

“As campaigners and lobbyists pressure the boards of global companies to change their ways, it is crucial not to lose track of the fact that corporations do bring substantial benefits to society. These include not just economic growth but second-order benefits – such as wider investment in people, innovation, and infrastructure – that the average citizen does not always ascribe to corporations. Balancing between garnering higher returns and adhering to ever-greater levels of social responsibility involves difficult decisions. If lobbying leads companies to scale back too far, the benefits they previously brought may disappear.”

Boards in the past had to deal with the major macroeconomic and geopolitical challenges of their eras: the Spanish flu, the Great Depression, the First and Second World Wars, the oil-price shocks of the 1970s, and the collapse of the USSR. Today, the challenges are equally formidable, including climate change, Covid 19, increasing global protectionism, widening social inequalities and cybercrime. The question is whether today’s corporate boards are up to the task. After reading this restrained book, readers may have more questions than answers.