Jeffrey Sonnenfeld

The board examined facts%2C and saw the failures of oversight and inadequate protection of children.

They faced a classic recovery dilemma%2C and courageously made the right choice.

Sometimes exoneration is the correct choice%2C sometimes contrition. Penn State chose contrition.

As Florida State University's Eric Barron newly named president of Penn State assumes office, he inherits a much different place than either of the two presidents before him.

No doubt, the storyline of corruption and negligence in the boardroom is a tired tale. Less often heard -- and what makes Penn State's experience one to regard — is the story of those who right the ship.

In the aftermath of the Jerry Sandusky child abuse scandal, Penn State's leadership — enamored by its legendary football dynasty — was widely viewed as negligent in allegedly turning a blind eye to sexual abuse reports. At the same time, devoted alumni and loyalists to iconic coach Joe Paterno were outraged by the unusually harsh sanctions imposed by the NCAA. But rather than fight, as many alumni demanded, the Penn State board switched. The board examined the facts, and saw the failures of oversight and inadequate protection of children. They faced a classic recovery dilemma, and courageously made the right choice.

CEOs and boards are rarely prepared for the crisis that forces them to address the paradox between a strategy of exoneration and a strategy of contrition. Sometimes exoneration is the correct choice, sometimes contrition is the right course. Penn State's board understood this, and more importantly chose contrition.

One of the first, and most important, steps on this path was the appointment Rodney Erickson, a 30-year veteran of the university and its former provost, to step in to fill the leadership void of the ousted predecessor Graham Spanier. In short, they hired a Jimmy Stewart-like pillar of integrity and responsibility. Erickson withstood the public outrage as he became a target of among alumni and even hostile defensive denials of the state's governor.

Secondly, the board decided to step up and hire the tough, objective former FBI chief Louis Freeh to investigate the administrative system and governance culture. Ultimately, the Freeh report determined not only that university officials were at fault for failing to take any steps to protect the children who Sandusky victimized, but also that the board had failed in its duties to oversee the president and senior university officials.

Third, the board wisely drew on its reservoir of internal talent as well, asking board member and Merck CEO Kenneth Frazier to chair Penn State's special investigation committee. Frazier is not only a revered CEO but also was the general counsel of Merck who was well battle-tested in public controversy with a track record for using the truth to repair reputations. Boards often under-utilize their own wise experts.

While some trustees initially contemplated how to contain the damage from Freeh's findings, board chairman Karen Peetz convinced the board that constructive actions rather than defensive retreats were required to restore Penn State's reputation and public trust — a fourth, important move.

Current board chair Keith Masser provided needed continuity of leadership direction to reinforce the board's resolve, implementing Freeh report remedies including: a crisis response system, training and child protection — and were adopted quickly without defensiveness or bureaucratic obfuscation. President Erickson and the board chairman strengthened security measures to safeguard children through compliance training for crime reporting and incidents of abuse, and hiring a compliance officer.

The board's actions led the NCAA to relieve certain punitive sanctions that it had placed on the university. In a larger sense, however, the board's actions have paved the way for a new era of leadership at Penn State University.

Barron begins his tenure at an institution that through courage and contrition is finding the way to rebuild the integrity of its once sterling brand.

There are lessons here for corporate boards. As they face tenacious prosecutors, activist media campaigns and draining plaintiff litigation, they should remember the wisdom of Kenny Rogers when he said, "You've got to know when to hold them and know when to fold them."

With pressures both ways, Penn's State's board figured out the right course.

Jeffrey Sonnenfeld, is senior associate dean and Lester Crown Professor of Management Practice, at the Yale School of Management; author of Firing Back: How Great Leaders Overcome Adversity and a member of the new National Commission on College and University Governance.

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