Corporate Governance Aims


 
Corporate Governance > Forum Log in

Corporate Governance Aims
K.Narayana Moorthy, HR Consultant, India

Any corporate governance framework has at least 3 purposes:
  1. TRANSPARENCY: Board is telling what is going on
  2. ACCOUNTABILITY: Board is taking responsibility
  3. CORPORATE CONTROL: Ensure the Board is doing the right things
Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from the moral hazard and manager's opportunistic behavior.
Some internal governance control mechanisms are: Ownership Concentration; Board of Directors representing the firm's ownership by monitoring strategic decisions; Enhancing the effectiveness of the Board by evaluating the performance of the Board; Executive Compensation - dealing with salary, bonuses longterm incentives to align key managers.
The overall focus should be on balancing the power of the board and the top management.

 
 
Corporate Governance Aims (Continued)
K.Narayana Moorthy, HR Consultant, India
What is Corporate Governance Concerned With?
Corporate governance is concerned with holding the balance between economic and social goals, and between individual and communal goals.
Why is there a need for Corporate governance?
  • It is one of the key elements in improving economic efficiency and growth.
  • It reduces the cost of capital;
  • Encourages more stable sources of financing;
  • Facilitates broadening and deepening of local capital markets.
What is key focus of Corporate governance?
Organization's reputation;- Valuation & profitability are directly linked to governance;- Effective & Real time risk management; -and Adhering to regulatory Compliance.
(Further comments will follow in the next).
 

 
Corporate Governance Aims (Continued )
K.Narayana Moorthy, HR Consultant, India
4 pillars of good Corporate Governance:
  1. Accountability
  2. Transparency
  3. Predictability
  4. Participation
These 4 are strengthened by three context drivers (3P Model of Bartlett and Ghoshal):
  1. Purpose
  2. Processes
  3. People
By appropriately interpolating, and by selecting a strategy, and if the above 3-Ps are balanced and integrated, we can distinguish 4 Strategies in a four quadrant matrix:
  • Strategy 1: (for 3Ps): LOW pressure for Integration & HIGH pressure for Differentiation. Towards responsiveness of market demands.
  • Strategy 2: (for 3Ps): LOW pressure for Integration & LOW pressure for Differentiation. Towards developing value chain and control of technology.
  • Strategy 3: (for 3Ps): HIGH pressure for Integration & LOW pressure for Differentiation. Towards creating strong economy, full value chain innovation and knowledge.
  • Strategy 4: (for 3 Ps): HIGH pressure for Integration & HIGH pressure for Differentiation. Towards responsiveness & integration in moving people; for developing innovation and knowledge.
 

   







 

    Do you wish to study further? You can learn more from the summary, forum, discussions, lessons, courses, training, instructions, expert tips, best practices and education sources. Register.  


Special Interest Group Leader

You here


More on Corporate Governance
Summary
Forum
Best Practices

Expert Tips

Resources

About 12manage | Advertising | Link to us | Privacy | Terms of Service
Copyright 2017 12manage - The Executive Fast Track. V14.1 - Last updated: 22-7-2017. All names tm by their owners.