Authoritarian-type chief executive officers have been put on notice by their boards of directors -- they must learn how to share power.

Professor Jay Lorsch, of Harvard Business School, said an evolution has been going on in boardrooms across North America toward giving directors more oversight of management and chief executive officers.

"It is an evolution that's moving along pretty quickly,'' he said. "In the US it's quite remarkable the amount of change which has taken place over the last decade. More and more directors take their jobs seriously now. They can't all agree on how to do their job, but I think they all accept that there is a job to be done.'' In the US the push came from shareholder activists -- mainly large institutional investors -- who have become much more active in pressuring boards to challenge management. Chief executive officers looking to hold on to power have not been amused.

"Traditionally, corporate leaders have considered a powerful, active board to be a nuisance at best and a force that could improperly interfere in the management of the company at worst,'' Professor Lorsch believes. "They have preferred directors who are content to offer counsel when asked and to support management in times of crisis.'' CEOs who resist the trend will be doing their companies a disservice because the move to change could become adversarial. Disruption of management is the likely outcome he believes.

"The directors have to monitor the performance of the company,'' Professor Lorsch said in an interview on Monday. "That requires an evaluation of the company's progress, approval of the company's strategic direction and an evaluation of the CEO as well as an evaluation of how well the board is working. It really does shift the power from a situation where the CEO dominated the board.'' Companies which have empowered their boards have found they have better informed directors who communicate their ideas more effectively, Professor Lorsch discovered during his research.

One change Professor Lorsch would like to see is the separation of duties of the CEO and the chairman of the board. In more than 80 percent of publicly held US corporations the two roles are held by the same person and this leads to dominance of the board.

"It is probably not the best practice,'' he said. "In America it's the way it's done and I don't think we're going to change it. In the UK there is much more readiness to have the chairman's role separated from that of the CEO.'' Another trend has been for directors to sit on less company boards than they did in the past.

"Two-thirds of directors of US companies are CEOs of their own companies,'' he said. "It used to be ten years ago that CEOs running their own companies would be on five or six boards. Today most CEOs will maybe serve on one or two other boards and that's it. The reason is that it takes time and they want to take those jobs seriously.'' He believes that the ingredients of an empowered board are one in which: Most of the directors come from outside the company and have no relationship with it; The board is small enough to have common objectives and recognise their primary role is to monitor management and performance and not manage the company; Members represent a range of business experience; There is communication among directors during meetings and afterward; Directors select a leader from among themselves if the CEO is also the chair; Committees are made up entirely of outside directors; Members receive intelligibly presented information.

Professor Lorsch was in Bermuda for a seminar on making corporate boards more effective. The seminar at the Hamilton Princess was hosted by Bermuda-branch of the Institute of Directors.

Geoffrey Moore, chairman of the local organisation, said the trend towards better corporate governance is underway in Bermuda, but is occurring slowly.

"There is a desperate need for better corporate governance in Bermuda,'' he said. "The way boards are run is changing radically but it's going to take time. There are some nepotistic companies in Bermuda and that's going to take a long time to change. Even close family held companies do realise they have to invest in people and have business plans. They have to look to outsiders to give them new ideas. To look in an introverted way is not going to benefit any company -- even closely held ones.'' He said examples like the Bank of Bermuda's move to empower its board of directors could help make the Island even more attractive to companies looking for an offshore home.

"The Institute's main mission statement is to encourage effective corporate governance both in the local companies and in the international companies resident in Bermuda,'' he said. "I feel that if we can do this we will be way ahead of our partners in other offshore locations and it will be another advantage for companies setting up in Bermuda.''