Good Corporate Governance

Corporate Governance means (Cadbury Report, 1992) ‘the system by which companies are directed and controlled', It is more commonly used in the wider sense of ‘good governance' that regulate the transparency, accountability and proper dealings in the conduct of an organization's business. Somehow, managing corporate governance is probably best seen as a system of risk controls and check and balances.

•  Governance in its strict sense:

This perspective goes beyond ‘governance in its strict sense' that mainly focuses on the relationship between management and shareholders. More specifically, the respective committees at board level emphasize the strategy with respect to the level of risk allowed at the organization, the appointment and remuneration of top management and the responsibility of internal and external auditing. Much of the focus has been on the non-executive and or independent director who supposedly guarantees the independence of judgment and supervision of the executive management. In this strict definition, the main responsibility of corporate governance falls upon the board of directors. The current code includes an obligation on the board to review the company's systems of internal controls and the board should report to shareholders confirming that they have done so.

•  Governance in its broader sense:

Our services look at the overall governance risk of an organization, not just the fact whether or not the board complied with the internal regulation of the code or with the law as such. Governance in its broader sense emphasizes the generic relationships between management and shareholders, between management and employees, between the organization and its many relevant external stakeholders such as suppliers, customers, media, government, regulatory institutions and NGOs to just name a few. When dealing with those relationships, conflicts or tensions cannot be completely avoided. We offer mediation in cross-cultural and ethical conflicts and how to move ahead to manage those relevant stakeholder relationships beyond a pure PR exercise.

Our focus on ethical and social norms is not intended to detract from the importance of the legal and regulatory side of business. Tightening the law or securing compliance with governance rules of boards, however desirable or necessary, will not be sufficient to raise the level of corporate ethical behavior or strong leadership based on integrity. If you want to make a real difference, you need to give people a positive basis for trust and respect. Hence, there is a need for an ethical vision to live by – governance in its broader sense – and not merely severe punishments for misdeeds. A mere legalistic interpretation of governance cannot inspire a far-sighted corporate leadership that is needed.

•  Global Best Practices for Governance: Responsible Decision Making

As the world is changing, leadership will need to adapt as well. Today, top management is responsible to a wide range of stakeholders who are often scattered all over the world. Top management is juggling cross-border constituencies including employees, multiple suppliers, customers, creditors, governments (with different regulatory systems), relevant NGOs (environmental, worker's rights, human rights, etc.) among others. Effective leaders today must develop the skills for turning these differences into opportunities.

Decision-making is becoming far more complex. Cross-border conflicts and tensions – cultural, economic, religious, ethnic, and ideological – are extremely common. Conflict resolution through creative dialogue and challenging transformation of all parties involved will become vital to survive and innovative solutions in such a complex world.