Synopsis of Presentation
on
Corporate Governance
at the Workshop
on
Corporate Laws
Organized by KTBA on 10th December 2011
by
Fasihul Karim Siddiqi
What is Corporate Governance?
“The nuts and bolts of how the company is run” (Kaushik & Dutta 2005)
“ A system by which business corporations are directed and controlled”
(OECD 1999)
“Corporate governance is the system by which companies are directed and
controlled. Boards of directors are responsible for the governance of their
companies. The shareholders’ role in governance is to appoint the directors and
the auditors and to satisfy themselves that an appropriate governance
structure is in place. The responsibilities of the directors include setting the
company’s strategic aims, providing the leadership to put them into effect,
supervising the management of the business and reporting to shareholders on
their stewardship. The Board’s actions are subject to laws, regulations and the
shareholders in general meeting.” (Cadbury Report: 1992)
What is Corporate Governance?
Since the corporation’s aim is to maximize profits, Corporate governance which
is the entire process by which corporation are managed and controlled, ensures
that the profits are made by adhering to universally accepted corporate
governance principles of FAIRNESS, ACCOUNTABILITY, RESPONSIBILITY &
TRANSPERANCY ------- The four pillars of corporate Governance.
Every organization has a Corporate Governance --- a governance system that
concerns the distribution of power & responsibilities between the
investors/owners represented by the BOD and CEO representing the
management of the company.
Corporate Governance
performance.
defines
accountability
for
the
organization’s
What is Corporate Governance?
• Corporate Governance establishes clear structures regarding accountability,
responsibility and transparency at the head of the company and defines the role
of boards and management.
This definition differentiates CG from other management themes in several ways:
First, it deals only with the company’s top management (but sometimes also with
specific CG implications further down the corporate ladder, such as subsidiary
governance or compliance issues).
It does not deal with the content of a specific strategy and the organization as such,
but specifically with how accountability and responsibility are allocated-especially
between the top management and the board- and how this is made transparent to
the stakeholders.
• In short: who is responsible for what?
• Transparency is not only concerned with the accountability dimension, because it
would be difficult to hold someone accountable without being able to benchmark
performance. CG does not, however, justify this benchmark, it simply describes the
process; how a specific corporation has indentified this benchmark
History of Corporate Governance – A tale of crime and
crisis
(Steger and Amann 2008)
Need for Governance
• Just as a democracy is a government of the peoples, by the people and for the
people
• A corporate entry is a creation of law, of the society, by the society and existing
for the society.
State
Corporate Entity
Governor
(Members of the legislature
elected by people)
Board of Directors
Management
(The President and the council
Minister to govern it)
CEO
Managerial Staff
Governed
(People in the country)
Shareholders and
the stakeholders
Philip Kotler’s Marketing 3.0
SIX DECADES OF MARKETING
Marketing 1.0
Marketing 2.0
50’s & 60’s
Product Management
The four ‘Ps’
The Marketing Mix
Focus on Product
70’s & 80’s
Customer Management
Focus on Customer
More ‘Ps’ added
(People, Process, Public Opinion, Political Power)
90’s & 20’s
Brand Management
1989 appearance of
personal computer.
Networking of computers
& humans resulting in
consumers interconnections
Focus on Human Emotions
Birth of Emotional
Marketing, experimental
marketing and brand equity
Philip Kotler’s Marketing 3.0
SIX DECADES OF MARKETING
The Financial Crisis of the 2007 -- Deepest recession after the Great Depression of 1930’s,
results in lost of customer confidence in corporations ability
to deliver goods for lack of Good Governance
Marketing 3.0
To revive customers lost confidence
Marketing has to change its traditional approaches and focus on Human
spirits
Corporations must move to connecting with Community
“Communitization”.
Value Addition Beyond
Corporate Laws and Corporate Governance Towards Business Sustainability Model
Profitability
Operational
Performance
Fairness
Compliance
With
Corporate Law
Corporate
Governance
Transparency
Customer Loyalty
Employee Loyalty
Business
Sustainability
Disclosures
Accountability
Responsibility
Personal Social
Responsibility
Corporate Social
Responsibility
Communitization
( Connect with Human Spirit)
“Good Corporate Governance is a necessity, and no longer a
luxury. Unless a corporation follows the highest degree of
transparency and the best principles of corporate governance,
it will not attract world-class investors. Most importantly,
corporations have to be fair to all stakeholders. Sustainable
success is not possible otherwise.”
N. R. Narayana Murthy
Chairman
Infosys Technologies Ltd