What makes a good director depends on how you define "good". To some, it could be having the cost-cutting ruthlessness needed to save a firm from failing; to others, it's a paternal approach to employees that counts. Whatever these attributes may be, the late Carol Kennedy examines how they are perceived to have changed over time

Good directors, like good leaders, are more often made than born—though both start from a foundation of integrity and values. Warren Bennis, the world's foremost authority on leadership has, in old age, come round to the view that leadership can be taught, and that most of the world's outstanding business leaders have learned the elements of their success from others—not solely from their business school professors.

Some were fortunate to find a mentor early. Having drifted through various trainee courses, Sir Stuart Rose picked up the necessary retailing skills he brought to Marks & Spencer from Sir Ralph Halpern and John Hoerner during a stint at Burton Group. A select few, such as vacuum cleaning entrepreneur Sir James Dyson and the late beauty retail superstar Dame Anita Roddick, have succeeded through sheer dedication to a big idea—in Dyson's case after fighting the vested interests of much bigger manufacturers.

The roots of good directorship can come from a variety of sources. For example, in 1969, as chairman of the newly merged Cadbury-Schweppes, Sir Adrian Cadbury based the company's guiding values on the Quaker principles of strong social conscience allied with business skills. Cadbury used eight paragraphs headed "The Character of the Company", whose principles put many of today's jargon-filled mission statements to shame with their simplicity: competitive ability; clear objectives;  taking advantage of change; simple organisation; committed people; openness; responsibility to all those with a stake in the firm's success—shareholders, employees, customers, suppliers, government and society at large—and quality.

Sir Adrian quoted an early Cadbury policy that the company should aim for "the best possible quality—nothing is too good for the public". He continued: "But quality applies to people and relationships, as well as to our working lives. We should set high standards and expect to be judged by them. The quality we aim for in all our dealings is that of integrity... it must be consistently applied to everything which bears the company's name." If only Enron and its ilk had followed such a credo.

Quaker family businesses never needed management consultants to solve problems. Quaker communities quickly established a network of mutual business assistance. Friends, as members of the faith are known, would rally round any Friend in difficulty with his business, analysing and advising the best course of action. Quaker business was founded on the apprentice system and once an apprentice had qualified, the community would provide funds for him to start up his own enterprise. This system, wrote one historian of US business, "became the primary source of young, well-trained, ethically sound people who were to sustain Quaker businesses from generation to generation".

From the mid-20th century, this communal self-help was replaced by legions of management consultants and gurus from the newly established business schools. Advice on running business organisations is now a billion-dollar global industry, but does it actually help to produce good directors?
As a recognised profession, management is barely 100 years old and, for its first half-century, was largely governed by the drive for efficiency, in which workers were often treated like cogs in a machine. "Scientific management", developed by Philadelphia engineer Frederick W Taylor and his followers in time-and-motion studies (and satirised by Charlie Chaplin in his classic comedy Modern Times), ruled business thinking from before World War I until the 1960s. Though largely discredited today, Taylorism inspired the re-engineering trend of the 1990s and still has followers among managers trying to squeeze the last ounce out of limited resources.

The switch towards treating employees as individuals with aspirations took off in the 1960s with the work of academics such as Douglas McGregor, who provoked debate on top-down versus participative management, and Abraham Maslow with his "hierarchy of needs". Performance and profit
began to be linked to the wellbeing of the workforce—though earlier pioneers such as Cadbury-Schweppes, with its mini-welfare state at Bournville, and the John Lewis Partnership, were still a minority.

The Lewis scheme was inspired by John Spedan Lewis in 1910, who, stuck in a traffic jam, had a vision that employees could be better motivated by being made partners in the business, and the idea was realised after his autocratic father died in 1928. It has been a unique success story ever since, posting good profits most years despite a bumpy ride in 2001, when some partners were tempted to try demutualising the business in the hope of reaping substantial windfalls. 

Sir Stuart Hampson, the chairman who figured in January's roster of "good directors", saw off the mini-revolt (legally, the partnership scheme was watertight anyway). He remained a dedicated steward of Spedan's philosophy until his unexpected retirement earlier this year. "I am convinced that it is the secret of sustainable success," he maintained.

In the 1970s, job satisfaction and responsibility became acknowledged keys to productivity as "personnel management" gave way to "human resources". Rosabeth Moss Kanter, the world's leading female management guru, demonstrated in such books as Men and Women of the Corporation and The Change Masters the wasted human capital that companies inflicted on themselves by not promoting female talent. She also introduced the concept of "empowerment"—pushing responsibility down the line. Soon businesses everywhere claimed to do it, though rarely with the necessary degree of trust.

Enlightened boards gradually realised that keeping staff content was a logical way to pass on that feeling to customers, and hence to the market. In the mid-1980s, the newly privatised British Airways took off in both reputation and profitability under then CEO Sir Colin Marshall's programme of staff motivation called "Putting People First". Lord Marshall's successor Bob Ayling lost that plot completely and the company's industrial relations are still fragile today.

The impact of corporate governance has, to some extent, forced "goodness" onto boards. It is doubtful if any chairman today could become as admired as Sir Owen Green of BTR was in the 1980s: he piled up the profits but thought non-executive directors a waste of space. Companies are now much more bound by public accountability, ethical requirements, independent boardroom advice, and the whole agenda of responsibility to the community, which has been accelerated by climate change and the race to be greener than the next business.

Sir Stuart Rose has buffed up his already shining halo by committing Marks & Spencer to a £200m programme of eco-friendly policies, from becoming "carbon-neutral" to recycling plastic bottles into polyester clothing. Within days, Sir Terry Leahy announced that Tesco would label its products with carbon-emission ratings. If consumers and investors vote for this "greenery" with their wallets, other companies will jump aboard the environmental bandwagon and the effect on business—even on the future of the planet—could be significant.

But good green credentials are not always enough. Lord Browne, one of the UK's most respected business leaders and an environmental pioneer in his industry, has been attacked over safety at BP's US refineries. The Texas City explosion in 2005 resulted in 15 deaths, and pipeline corrosion at Alaska's Prudhoe Bay in 2006 caused a devastating production shutdown.
The investigative panel, led by former US secretary of state James Baker, found that Browne was "instrumental" in shaping BP's corporate culture of "short-term focus" and a tendency to delegate without clearly defined accountability. Whatever the board's ideals, the committee concluded it failed in its ground-level safety responsibilities. Even Tony Hayward, Browne's successor, has criticised the leadership for being too "directive" and for "not listening enough" to people lower down in the organisation.

The Baker verdict will cloud Lord Browne's retirement after a career unparalleled in peer adulation: not even Jack Welch was dubbed the "Sun King" by his fellow industrialists. Although Browne and John Manzoni, BP's board director in charge of refining and marketing, both insist they never turned down requests for safety funding, the report leaves a lingering suspicion of corner-cutting. And comments from some of BP's US workers suggest a lack of trust in their management's commitment to safety.

Trust is now acknowledged to be one of the most powerful factors in good corporate performance. Research by W Chan Kim and Renee Mauborgne, professors at INSEAD, the international business school in France, has offered convincing evidence that when employees trust the way management decisions are made—even if they don't agree with them-corporate performance improves by leaps and bounds. Innovation also flowers, as staff feel their ideas will be listened to.

Karen Stephenson, a rising US management thinker and specialist in studying human networks, believes trust enables people to work together with maximum co-operation and commitment. Stephenson has amassed an unrivalled database of confidential interviews with corporate staff, and assists the US defence department in unravelling the web of loyalties within the al-Qaeda terrorist network.

The big revolution in management thinking in the past 20-odd years has been the switch from process to people. Many firms suffered in the late 1990s from loss of trust after ham-fistedly "re-engineering" their processes—often a barely concealed way of cutting headcount. This also left them without experienced staff when the market picked up.

While the basic purpose of a company remains the creation of wealth, social conscience is increasingly seen as compatible and even complementary with it. No one has taken this further than Michigan University professor CK Prahalad, whose pioneering book The Fortune at the Bottom of the Pyramid argues that multinational corporations could help billions of the world's poorest people with products they need and create new markets in the process. Philanthropy, self-interested or not, has become fashionable, and each year more successful business people are putting money and time into helping new enterprises sprout.

Corporate social responsibility has become a key part of good directorship, often driven by public criticism of outsourcing to low-cost countries. Disney and McDonald's (no stranger to pressure-group hostility) have recently embedded systems to  monitor possible workplace abuses in China; while clothing manufacturer Gap operates a scorecard system that ranks its suppliers on factors including working conditions, speed of delivery and price.

The UK-based Ethical Trading Initiative (ETI) encourages independent monitoring of the supply chain, but even its members can be caught out by the unexpected consequences of decisions made thousands of miles away from production lines. A recent ETI report reveals how market-led decisions on price reductions or design changes can lead to unpaid or excessive overtime in far-flung suppliers.

In this globalised world, it has perhaps never been so difficult to be a "good director". But that is where the zeitgeist is taking us. And wherever it's achieved and celebrated, business will gain a new public respect. 

The late Carol Kennedy is the author of Guide to the Management Gurus, whose new revised edition is published by Random House.