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Three Governance Lessons Learned from the NFL

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Three Governance Lessons Learned from the NFL

Both public companies and NFL teams are complex organizations focused on profit and victory

Monday, February 16, 2015

By Laura Finn, Digital Media Editor, NYSE Governance Services

Another Super Bowl has passed and we’re stuck with Major League Baseball news from now til next fall: pitchers and catchers countdown, coverage from Florida, trades, injuries, steroids, and eventually, actual games. In the face of Deflate Gate, the New England Patriots won the game. While there’s an obvious link between Deflate Gate and governance (cheating, ethics, compliance, profit), there are other parallels between these two universes.

First, ethics are not black and white issues on the gridiron, or in corporate governance. While some ethical issues can crush a business (remember Enron?), other ethical violations are a matter of paying a fine and moving on. We see this problematic pattern in the NFL. The last time the Patriots won the Super Bowl coincided with the team’s days of spying on opponents. Now, the Pats have won the Championship under the glare of Deflate Gate. I liken these two gates to FCPA-like violations. They aren’t good for business, but in many cases, you pay your fines and move forward, like Avon or Chiquita.

Second, NFL teams hold a draft each year to choose the best players around the country for their teams. If a player isn’t working out or performing to potential during the season, he may be traded. And at the end of every football season, there’s an inevitable firing of head coaches and offensive & defensive coordinators. The NFL even has a special name for the day on which these terminations take place: Black Monday. Seven head coaches have been fired this post-season, and many others are on the hot seat. There’s an obvious governance lesson to be learned from the NFL’s roster and staff management practices—evaluate your board and key executives annually and be prepared to refresh your team. If your company wants to be the best in your industry, it’s important to draft and retain the best players, and to trade those that aren’t helping you on your way to victory.

On that note, if you’re searching for a board seat (or the presidency), it’s helpful to befriend the CEO (or major donor/NFL team owner), or at least try.

Third, NFL teams searching for a new head coach must follow the Rooney Rule. Created in 2003, the Rooney Rule aims to create diversity amongst NFL head coaches. This year the New York Jets hired Todd Bowles, a more-than-qualified coach with years of experience, who happens to be diverse. Some find the Rooney Rule controversial because they feel it creates tokenism, but the NFL has to start somewhere to create more diversity. Corporate Boards can and should learn from this rule. NFL organizations do not interview unqualified, diverse candidates to meet the rule. Rather, there’s a plethora of qualified, diverse candidates who have been overlooked in the past. This is also true of board director candidates. So c’mon, nominating/governance committees—learn from the NFL and look for diverse potential executives and fellow directors.

Both public companies and NFL teams are complex organizations focused on profit and victory. The goal of an NFL team is to make money, win championships, create a legacy, and wow the fans. Those are actually the same as publicly-traded companies when you think about it, making lessons learned on the gridiron similar (and essential) for boards and executives.

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