In response to the scandals and collapses of the past two years, governments have rushed in to tighten the rules of corporate governance. That is no bad thing: good governance may not guarantee good performance, but at least it provides tools to tackle bad management. And it is right to give boards a sense of responsibility and the means to exercise it. All this helps to rebuild trust.
There is, though, a danger that regulators, under pressure to be seen to act, will eventually go too far in some countries. Regulation is only one of several growing and conflicting constraints on corporate leaders. The glare of the media, the incessant demands of analysts and the increasing politicisation all make the job harder to do well. But corporate leaders now have an alternative. The demand for capable people to run businesses held by private-equity ventures is booming.
And If All Else Fails...
Talk to the chief executive of a public corporation about a job in private equity and "the first question is, 'When can I start?' They bite your hand off," says Ashley Summerfield, a headhunter with the London office of Egon Zehnder. Running a business for a private-equity firm means not only shelter from the limelight: no small shareholders turn up at your annual meeting to moan about your pay, and the media and non-governmental groups are much less intrusive. In addition, there is a refreshing lack of ambiguity about what you are expected to achieve. The timeframe is manageable. The investor is rational and interested. The rewards for success are huge. And nobody asks awkward public questions about your pay package.
Running a large public company is still a thrilling and rewarding job, but nobody should take it for granted that there will always be a supply of leaders with talent and integrity willing to take it on. Too much mistrust and invective, and some of the best may simply decide the task is not worth the effort.
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