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An audit committee chair considers how he can help his committee become more effective given the increasing regulatory demands on audit committees. He also wrestles with the lack of specificity in audit committee duties and whether his committee should take on additional responsibilities. In particular, he considers the growing concern over risk oversight and wonders what kinds of risks the audit committee should consider and whether they should be the sole repository for risk management. This case includes a historical overview of the beginnings and evolution of audit committees, and the laws and regulations that have affected its role over time.

Mina O'Reilly, an officer at Logan Airport's Transportation Security Administration (TSA) in Boston, must discipline an employee responsible for a security breach that resulted in a 45-minute terminal closure during peak hours, a potential threat to traveler safety, and travel delays across the U.S. O'Reilly considers the impact of her decision on a shifting labor force: the growing divide between those employees deeply committed to the mission and those joining to simply find a job. The senior TSA staff and airlines are calling for accountability, but the person responsible for the breach is a passionate and valued employee who has been with TSA since its formation. As her shift approaches, O'Reilly must decide whether or not she can clock in as usual.

Structurally speaking, we are on the cusp of a new competitive era. The old era, in which one independent company wrestled with its horizontal market rivals for a bigger slice of the pie, is giving way to a game that is more nuanced, more challenging-but also bigger. In this new game, the smartest, most successful players will be those who build more unified end-to-end systems that deliver tangible value and improved experiences to customers. This technical note focuses on how to manage and orchestrate vital, differentiated-and profitable-customer experiences on a recurrent basis across inter-organizational value chains and routes-to-market systems.

The remuneration committee at Shell decided to exercise their discretionary power to award five top executives a bonus for 2008, even though they had not met the necessary performance measures under the compensation plan. Proxy advisors RiskMetrics and the British Association of Insurers advise their clients to vote against the plan at the upcoming 2009 annual meeting. The Shell remuneration committee wonders how the shareholders will react.

At the 2009 Shell annual meeting, the majority of shareholders vote against the exclusive pay package. The B case compares the remuneration committee perspective (and their rationale for using discretion to award the bonuses) as well as the shareholder perspective (and their rationale for reacting so strongly against the pay package).

Poor leadership in good times can be hidden, but poor leadership in bad times is a recipe for disaster. Looking at 360-degree feedback data for more than 11,000 executives, the authors identified 10 leadership shortcomings, among them not walking the talk, failing to learn from mistakes, and lacking clear vision and direction.

Whether it's a basic Mr. Coffee or a gadget that sports a snazzy device for grinding beans on demand, the office coffee machine offers a place for serendipitous encounters that can improve the social aspect of work and generate new ideas. What's more, a steaming cup of joe may be as good for your health as it is for the bottom line, says Lee, a professor of medicine at Harvard Medical School and the CEO of Partners Community HealthCare. Fears of coffee's carcinogenic effects now appear to be unfounded, and, in fact, the brew might even protect against some types of cancer. What's more, coffee may guard against Alzheimer's disease and other forms of dementia and somehow soften the blow of a heart attack. Of course, its role as a pick-me-up is well known. So there's no need to take your coffee with a dollop of guilt, especially if you ease up on the sugar, cream, double chocolate, and whipped-cream topping.

In this article, the author of The First 90 Days assesses Barack Obama's attempts to build momentum for change. Creating substantive early wins is critical for transitioning leaders, and Obama's moves to close the U.S. military detention facility at Guantanamo Bay and reverse longstanding policies on stem-cell research have won him broad support. Laying the foundation for longer-term changes is also important, and Obama scores well here in part because of the strong team he has appointed. Surprisingly, however, Obama's efforts to articulate an inspiring vision so far haven't been compelling enough to reach a public frightened by the financial collapse.

In 1971, when Alice Waters founded Chez Panisse in Berkeley, California, chefs at even the highest-end restaurants were still using frozen meat and produce. Waters chose to focus on fresh, simply prepared food using organic ingredients. She invented what is now known as California cuisine and went on to launch a sociopolitical movement based on her ideas about food and community. Her unwavering commitment to quality has produced some steep business challenges in the past, but Chez Panisse has survived for nearly 40 years and is now regarded as one of the best restaurants in the world. What does the recession mean for its future? In this conversation with HBR editors, Waters shares her thoughts. She believes more than ever in the importance of buying "real" food from people who are taking care of the land, but the restaurant kitchen is becoming thriftier and is recycling with even greater energy and enthusiasm than before. Waters keeps her staff motivated and loyal in part through an unorthodox form of job sharing: The two chefs in the main restaurant are paid for a full year but work only six months each, spending the rest of the time developing their skills in France. The cafe chefs are paid for five days a week but come to work only three, using the other two to visit the markets and create their menus. Waters couples her passion for sustainability with a readiness to adapt. She has traveled around the country presenting dinners in collaboration with local people and believes that her restaurant can change with the times. "We could transform ourselves into a soup kitchen or move to a farm," Waters says. "There's a lot of flexibility in the big vision of what Chez Panisse is."

Even in times of economic growth, it's challenging to be a good boss. Research shows that people placed in positions of authority often become less mindful of others' feelings and needs. Meanwhile, those in subordinate roles devote immense energy to watching and interpreting the actions of leaders. These tendencies make for a toxic tandem, which is only exacerbated during a crisis. Sutton, a Stanford professor, provides a useful framework to get bosses focused on what their people need from them most. In a situation where people feel threatened, a good boss finds ways to provide more predictability, understanding, control, and compassion. Predictability. Give people as much information as you can about what will happen to them and when. Preparation will reduce their suffering, and they can relax in the meantime - as Londoners during the blitz were able to do when the air-raid sirens were silent. Understanding. Accompany any major change with an explanation of why it's necessary and how it will affect routines. Internal communication should be simple, concrete, and repetitive. Control. Don't frame an obstacle as too big, too complex, or too difficult to overcome; people will be overwhelmed and freeze in their tracks. When it's broken down into less-daunting components, they can tackle it with confidence. Compassion. Tend to the emotional needs of people who are let go, and help them preserve their dignity. This is essential both for them and for their colleagues who survive the cuts. Demeaning those who have left will demoralize those who remain and may drive the best of them to jump ship. A manager who provides all four remedies will be perceived as "having people's backs" and will reap the rewards of employees' deep loyalty for years to come.

If there's one thing that the past decade's business disasters should teach us, it's that we need to stop evaluating corporate leaders simply on the basis of how much wealth they create for investors. A healthier yardstick would be this: the extent to which leaders create firms that are economically, ethically, and socially sustainable. The first step toward accomplishing that task is to create a culture of candor. Companies can't innovate, respond to stakeholder needs, or run efficiently unless the people inside them have access to timely, relevant information, point out professors O'Toole, of the University of Denver's Daniels College of Business, and Bennis, of the University of Southern California. Increasing transparency can be an uphill battle against human nature, however. The obstacles are numerous: macho executives who don't listen to their subordinates or punish them for bringing bad news; leaders who believe that information is power and hoard it; groupthink among team members who don't know how to disagree; boards that fail to question charismatic CEOs. Nevertheless, leaders can take steps to nurture transparency. By being open and candid, admitting their errors, encouraging employees to speak truth to power, and rewarding contrarians, executives can model the kind of conduct they want to see. Training employees to handle unpleasant conversations with grace also will break down barriers to honest communication. To avoid being blinded by biases, leaders can diversify their sources of information - an obvious measure that's rarely taken. Perhaps the biggest lever for cultural change is the executive selection process - choosing leaders for their transparent behavior, not just their ability to compete. And a few companies have even gone so far as to share all relevant information with every employee.

Will we ever learn? We'd barely recovered from Enron and WorldCom before we faced the subprime mortgage meltdown and more scandals that shook our trust in businesspeople. Which raises the question: Do we trust too much? In this article, Stanford professor and social psychologist Kramer explores the reasons we trust so easily - and, often, so unwisely. He explains that genetics and childhood learning make us predisposed to trust and that it's been a good survival mechanism. That said, our willingness to trust makes us vulnerable. Our sense of trust kicks in on remarkably simple cues, such as when people look like us or are part of our social group. We also rely on third parties to verify the character of others, sometimes to our detriment (as the victims of Bernard Madoff learned). Add in our illusions of invulnerability and our tendencies to see what we want to see and to overestimate our own judgment, and the bottom line is that we're often easily fooled. We need to develop tempered trust. For those who trust too much, that means reading cues better; for the distrustful, it means developing more receptive behaviors. Everyone should start with small acts of trust that encourage reciprocity and build up. Having a hedge against potential abuses also helps. Hollywood scriptwriters, for instance, register their treatments with the Writers Guild of America to prevent their ideas from being stolen by the executives they pitch. To attract the right relationships, people must strongly signal their own honesty, proactively allay concerns, and, if their trust is abused, retaliate. Trusting individuals in certain roles, which essentially means trusting the system that selects and trains them, also works but isn't foolproof. And don't count on due diligence alone for protection; constant vigilance is needed to make sure the landscape hasn't changed.

Who would want to join the audit committee of a board of directors? Wouldn't that just mean slogging through the minutiae of Sarbanes-Oxley compliance? Not anymore. Audit teams have pretty much mastered SOX compliance; they're now turning their attention to the meaty problems of increasing business value. To do that, say Northeastern University professor Sherman, Korn/Ferry's Carey, and Sprint CFO Brust, audit teams need a broader range of expertise. Four areas in particular cry out for new blood. Someone, the authors argue, needs to decipher financial guesstimates. GM reported a $3 billion loss in the second quarter of 2006, which it adjusted to a $1 billion profit. Why was that? Things might have gone differently last winter if the company's audit committee had explored the assumptions that GM's managers had used to come up with those kinds of disparate figures. Second, someone needs to keep an eye on M&A performance. Managers today have unprecedented discretion in determining estimates of an acquisition's fair market value, but such calculations clearly warrant greater scrutiny, since fully half of all mergers and acquisitions consistently fail to live up to expectations. Third, someone has to objectively analyze the myriad new risks facing businesses today. Imagine how altered the current economic climate might be if audit committees at Merrill Lynch or Lehman Brothers had recommended limiting their investments in mortgage-backed securities. Last, someone has to make sense of the difference between accounting standards used in Europe and those used in the United States and understand how those standards cloud companies' abilities to reward executives and accurately assess their own performance relative to rivals'.

Promotions to the C-suite are governed by unwritten rules. If you don't know what they are, you'll be left to your own devices interpreting vague feedback and finding a way to achieve your career goals. Beeson has created a framework to help you identify and address any issues that may be getting in your way. Executive placement decisions hinge on three categories of skills: nonnegotiables, without which you will not be considered for a promotion; deselection factors, which eliminate you as a candidate even if you're otherwise qualified; and core selection factors, which ultimately determine who gets the position. Leadership competency models typically fail to make these distinctions, and most don't spell out how skills should be demonstrated at different levels. In middle management, for instance, teamwork is a vital competency. At more senior levels, the imperatives are to think strategically and to acquire and develop talent. Many unwritten rules are especially elusive because they don't pertain to technical or business knowledge. Rather, they relate to the soft skills that give decision makers an intuitive sense of your potential for success. Complicating matters further, managers and HR professionals often give intentionally vague feedback - not direct constructive criticism - for fear of losing good employees. You'll need to dig deep to get useful input from executives and other colleagues: Project a sincere desire to understand what's holding you back. Ask questions, but don't lobby or argue. Avoid comments or gestures that convey defensiveness, which could cause the other person to clam up or move the conversation to safer territory. And be alert to code words and phrases - such as general observations about the need for "increased leadership ability" or "better communication" - that may mask fundamental issues.

Alain Deronde, the CEO of a French personal care company, has to choose a successor to head global product development from a diverse set of candidates with different backgrounds, strengths, and weaknesses. The candidates include Elise Bernier, Vice President of Marketing for Skin Care Products, Antoine Lambert, General Manager of Coeur Tendre (an ex-entrepreneur whose company Deronde had bought), Yang Jianguo, Country Manager of Deronde International's Chinese subsidiary, and Yves Saurac, Vice President of Product Development for Developed Markets.

This exercise is designed to help students and professionals map their professional networks and to identify areas of strength and weakness in their networks. "Network" refers to the set of relationships that is critical to someone's ability to learn new skills and competencies, get things done, advance in his or her career, and develop personally and professionally. The exercise takes 15-20 minutes to complete.

This undisguised case is appropriate for graduate-level organizational behavior, strategy, and leadership courses. Readers will be put in the shoes of a seasoned change agent hired to transform a publicly owned company on the brink of bankruptcy. With a 50% attrition rate, low employee morale, stock market delisting notice, failed ERP system, bank default, new credit facility search, forbearance agreements, and a going-concern opinion, the new CEO faced a significant crisis. The A case describes the situation and raises questions about the firm's viability when James Leto becomes CEO. Several key leaders in the organization push to move the company's core competency away from the reseller business toward an enterprise solutions and services business.

Brad Powell, the newly hired senior leader of a Christian church, must lead the organization to reverse a three-decade decline and return to fulfilling its mission. Brad spent the first six months assessing the situation, building relationships, and reiterating the longstanding mission of the organization. Now, with an understanding of its history, an intimate knowledge of the immediate challenges, and a clear vision of what the organization should become, Brad is considering his strategy and next steps. As the leader of a nonprofit organization resourced by members and volunteers, Brad must lead change that produces results without compromising the mission. The B case summarizes Brad's actions and the results.

Brad Powell, the newly hired senior leader of a Christian church, must lead the organization to reverse a three-decade decline and return to fulfilling its mission. Brad spent the first six months assessing the situation, building relationships, and reiterating the longstanding mission of the organization. Now, with an understanding of its history, an intimate knowledge of the immediate challenges, and a clear vision of what the organization should become, Brad is considering his strategy and next steps. As the leader of a nonprofit organization resourced by members and volunteers, Brad must lead change that produces results without compromising the mission. The B case summarizes Brad's actions and the results.