Professional Documents
Culture Documents
The 4 Ps
An OECD Definition
Corporate governance involves a set of relationships
between a companys management, its board, its shareholders and other stakeholders ..also the structure through which objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.
Preamble to the OECD Principles of Corporate Governance, 2004
An Indian Definition
fundamental objective of corporate governance is the enhancement of the longterm shareholder value while at the same time protecting the interests of other stakeholders.
SEBI (Kumar Mangalam Birla) Report on Corporate Governance, January, 2000
Globalization has not only significantly increasing and intensifying business risks, but also it has compelled Indian companies to adopt international norms of transparency and good governance. Corporate Governance policy recognizes the challenge of this new business reality.
A meaningful policy on Corporate Governance must provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management is not misused, but is used with care and responsibility to meet stakeholder aspirations and societal expectations.
Corporate Governance initiative is based on two core principles. These are: 1. Management must have the executive freedom to drive the enterprise forward without undue restraints; and 2. This freedom of management should be exercised within a framework of effective accountability
CG cont..
Quality is determined by the financial markets, legislation and other external market forces plus the international organizational environment; how policies and processes are implemented and how people are led External forces are, to a large extent, outside the circle of control of any board The internal environment is quite a different matter, and offers companies the opportunity to differentiate from competitors through their board culture CG a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory
Parties Involved in CG
Parties involved in corporate governance include the regulatory body e.g. the CEO, the Board of Directors, Management and Shareholders Other stakeholders who take part include suppliers, employees, creditors, customers and the community at large
CG Objectives
Integrate economic, social & environmental objectives in the Corporate
Strategic Plan
Translate objectives into a pragmatic Action Plan applicable at all levels of the organization MBO for teams and for indiv. Including Marketers, Buyers especially in relation to suppliers etc. External audits, audit reports, corrective actions if needed Education: managers, staff, etc. Issue Management: pro-activity allows to ensure a competitive advantage
Corporate Governance
To study 4m another slide.
Purpose
People
4 Ps
Performan ce
Process
Efficiency Growth
*Integrity and ethical behaviour: Ethical and responsible decision making is not only important for public relations, but it is also a necessary element in risk management and avoiding lawsuits. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making.
4. Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information. 5. Appropriate mix of executive and non-executive directors: The key roles of Chairperson & CEO should not be held by the same person