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read the following Donald Forge had been Chairman of the Manx Corporation, a provider of computer connector technology, for 6 years, and until 6 months

read the following

Donald Forge had been Chairman of the Manx Corporation, a provider of computer connector technology, for 6 years, and until 6 months ago in April, his association with the successful, publicly traded firm had been a point of distinct personal pride. But last April was when the article appeared in the Wall Street Journal, naming Manx along with three other firms, as under suspicion for backdating stock options in senior executive compensation packages.

The allegations had come as a shock to Forge and since then, he had done some soul searching about why that would be so. Had he been too trusting, too nave, too complacent - or worse, negligent in his oversight and duty of care?

Of course, once the suspicions surfaced, there was a flurry of board activity. Forge was grateful for the fairly clear "road map" that boards are expected to follow in such cases, including the creation of a "special committee" to investigate the situation and the decision to hire experienced, outside legal advisors. He did not have to invent the wheel or to confront too much resistance from his fellow directors on these steps.

And once the special committee began to talk to Manx senior executives, it became clear very quickly that the CEO, the CFO and the General Counsel had been deeply into "cooking the books," even creating phantom accounts to cover their tracks. Forge gave full support and access to the special committee and listened carefully to the guidance of the outside experts. The reality and scope of the problem was uncovered; the relevant information was shared with the appropriate regulatory investigators; the CEO, CFO and General Counsel were dismissed; and a new independent director, Evan Card, was persuaded to join the board.

Card was explicitly selected because of his reputation both for impeccable integrity and also for being hard as nails when it came to standing his ground against the prevailing winds in an organization or on a board. Forge felt it was an act of courage in and of itself to invite such an individual onto the board, and Card's acceptance came only after the board's promise that several more new directors would be brought in within the next few months.

None of these steps had been easy but they were not particularly surprising or controversial either. For the most part the board, which had never knowingly participated in any misdeeds, followed Forge's leadership and the advice of the outside advisors. They wanted to take the necessary steps to fix the problems. After all, there were lawsuits being filed against them individually for breach of fiduciary duty and they wanted to protect themselves. They believed that by carefully reviewing the results of the special committee's inquiries and remaining personally involved in the firm remedies, they could protect themselves as well as resuscitate Manx' reputation.

So when Manx continued to be on the front pages of the business press for months after the initial story broke, and when the firm was de-listed, Forge had to ask the question: "Why? Why won't this go away? How do we get on with the business of Manx, which is to make and sell technology products?"

His advisors sat him down for some hard truths, explaining that Manx had become the poster child for backdating, the latest corporate scandal to attract the regulators', the media's and the investors' attention. Their General Counsel had been convicted, their CEO would be soon, and the CFO was cooperating, in the hopes of a lighter sentence. Every action that Forge and his board took, in an effort to signal a restored integrity to the market, could just as easily be read as an effort to protect their own hides. From an outside perspective, as long as the board -- who in the best scenario had been misled, or in the worst scenario was complicit -- remained in place, why should the markets or the media be reassured?

Forge sat stunned when his advisors finished speaking and finally countered: "But what else can we do? If we leave the board, there is no assurance that a new board will have the history and the insight into Manx to lead it out of this mess. And then where will I and my fellow directors be, in light of our personal pending court battles?"

After Forge said this, the advisors just smiled faintly and said: "Precisely..."

It was at this point that Forge realized what he had to do. He knew the arguments for staying on the board: he was loyal to Manx; he knew the firm better than any newcomer and therefore was better equipped to lead it through this crisis; he was violating no legal or regulatory guidelines by staying; he wanted to fix his own mistakes, to clear his own name; and he feared that to leave would appear an admission of guilt. But after this conversation with his advisors, he was beginning to see that these last two reasons were ruling his decision. Truth be told, the business was not a mystery. Talented directors with industry knowledge could step in, and perhaps the Manx culture and norms which he claimed to know so well might not be such an asset anymore anyway.

But now Forge faced a new challenge. Even as he began to change his own mind about what was best for Manx, he realized that he would also need to influence his colleagues on the board. If the problem was the status quo, two or three new directors on a board of nine might not be a strong enough signal. Manx needed a clean sweep.

give your options on this.

But given how difficult it had been for Forge himself to accept this message, how could he persuade the board?

Place yourself in Forge's shoes: What would you say, to whom, when and how?

Consider the following when answering these questions: What are the main arguments you are trying to counter? That is, what are the reasons and rationalizations you need to address? What's at stake for the key parties, including those who disagree with you? How can you find allies among those who may agree with you? Does anyone agree with you? (Inside the board? Outside the board?) What is your most powerful and persuasive response to the reasons and rationalizations you need to address? To whom should the argument be made? When and in what context?

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