The Horse Race in Corporate Governance

Horse race

In corporate governance, an overt contest pitting multiple senior executives against one another for the job of chief executive officer is known as a horse race. Some directors and governance observers are uncomfortable with this strategy, which can have a lasting effect on the organization, but many admired companies have used the horse race model to successfully choose their next leaders. The challenge is to ensure that the competition and the decision itself are rooted in a sound leadership development system.

Among other things, this means building a pipeline of executives who can be groomed for leadership roles by a succession of critical, high-level positions through which they acquire the competencies and seasoning needed to lead a major enterprise. The traditional horse race approach has been an effective method of doing so at companies including General Electric, Procter & Gamble and GlaxoSmithKline.

At the Kentucky Derby on May 4, a field of twenty-one horses ran through pinkish light, their huge strides and hypnotic smoothness filling the grandstand with energy. War of Will, a long, lean gray colt, led the way along the backstretch, with McKinzie and Mongolian Groom close behind. On the far turn, you could see that all three were tiring, but not yet ready to give up. The horses’ lower legs take a tremendous pounding in a race, straining tendons and ligaments. To help them endure the pain, they are injected with a cocktail of legal and illegal drugs to mask injuries and improve performance.

The drug that the jockeys gave their horses that morning was Lasix, a diuretic marked on the racing form with a bold “L.” It’s supposed to prevent the pulmonary bleeding that hard running causes in most thoroughbreds. Nonetheless, most will still bleed, and many die from it.

In recent years, growing awareness of the dark side of horse racing has brought some improvements to the industry. But the exploitation of the young horses that are born into it continues apace. During the Derby, as well as in races around the country and the world, they are pushed beyond their physical limits under exhilarating pressure to win. And they are routinely killed, either from the excruciating pain of racing or from catastrophic cardiac or broken-limb accidents that can occur under such extreme stress.