A report

On
Governance, Leadership and Motivation

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Table of Contents
1. Introduction:........................................................................................................... 3
2. Corporate Governance:.......................................................................................... 4
3. Framework of Corporate Governance:....................................................................4
3.1 Principles of Corporate Governance:.................................................................5
3.1.1 Transparency and Discloser:........................................................................5
3.1.2 Integrity and Ethical behavior:....................................................................5
3.1.3 Roles and Responsibilities of the board:......................................................6
3.1.4 Other Stakeholders interest:.......................................................................6
3.1.5 Encouraging about the rights of shareholders:...........................................6
3.1.6 Shareholders participation in Management:................................................6
4. Influences on the effective performances of corporate governance:......................7
5. Structure of the Board of Directors and their characteristics:................................8
5.1 Responsibilities of the Board of Directors:.........................................................9
6. Different Types of Stakeholders:...........................................................................10
7. Importance of Group Cohesiveness and Group Dynamics:...................................11
8. Conclusion:........................................................................................................... 12
9. References:........................................................................................................... 13

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1. Introduction:
There are some rules or practices by which a company can be controlled or governed. These
rules or practices actually drive a company to the peak of success if they are being accomplished
properly. Corporate governance actually co-relates those rules and practices and shows the path
of success. It relates all the stakeholders of a company along with broad of directors, controlling
shareholders, minority shareholders and so on. It also balances the interest of customers,
suppliers and other financers also. So a director of an organization has to know all the pros and
cons of controlling the organization. Corporate governance helps a company to gain success as
well as efficiency through several rules and practices.

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2. Corporate Governance:
Robert & Nell (2008) found that corporate governance is a sound process and a system of law by
which corporations get the facilities to focus on all the internal and external corporate structures
in order to monitor the activities of management, directors and all the stakeholders. Through
corporate governance company can ensure their competence before the internal and external
stakeholders. Corporate governance actually play different roles like mitigation of confliction
between the stakeholders, controlling the internal and external stakeholders activities etc.
(Jonathan R. M., 2008). There are some ways of conflict of interest. They can be solved through
policies, laws, customs and institutions which has impact on companys governance. Corporate
governance builds up such responsibility among the stakeholders, directors, managers and
general customers. Economic analyst defines corporate governance in a different ways.
Corporate governance may include in relation to corporate finance, some economists say.

3. Framework of Corporate Governance:

The framework of corporate governance can be as follows:

Figure: Corporate Governance Framework

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We can divide the framework of Corporate Governance into 7 parts. These seven sectors or
framework of Corporate Governance is mandatory for an organization. Company cannot go
through to another framework leaving the previous one unfinished (Calder A., 2008).
3.1 Principles of Corporate Governance:
There are some principles related to corporate governance. Town Regeneration Partnership
Company has to follow the principle or corporate governance. The CADBURY and OECD report
actually represents some general principles which a firm is expected to perform in order to assure
their corporate governance. Bob & Robert (2012) demonstrated that the Sarbaney Oxley act is
taken by the federal government of United States of America in order to legislate those principles
which have been recommended in Cadbury and OECD principle.
3.1.1 Transparency and Discloser:
Town Regeneration Partnership Company should clarify the roles and responsibilies of the board
of directors and management along with publish it publicly in order to create the accountability
of the stakeholders. Town Regeneration Partnership Companys financial report should be
verified with integrity and unbiased or independent auditors should be appointed to accomplish
the auditing part of the financial report. Their financial report should be publish publicly. So that
external stakeholders can understand companys financial situation before taking any type of
decision. Company should disclose all the material fact that will influence investors decision
regarding the company.
3.1.2 Integrity and Ethical behavior:
Integrity and ethical behavior both is mandatory for corporate governance. Ethics can be build up
through some process. Company has to work on those processes or give those trainings which
will make the employees or other stakeholders to behave ethically and not to do unethical thing.
And integrity is the initial and fundamental requirement in choosing an employee or board of
director. It should be kept in mind that an honest employee is better than two dishonest but active
employees. When checking out the tools or other qualification of an employee, Town
Regeneration Partnership Company should consider integrity along with other qualifications.
Company should also have code of conduct for both board of directors and other stakeholders
which will promote responsible and ethical decision making.
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3.1.3 Roles and Responsibilities of the board:

As Town Regeneration Partnership Company is a newly launched company that is why its board
of directors do have a lot of responsibilities on them. They should take all the decision not for
own profit. They should take all the precious decision for the companys and stakeholders
progress. The board needs sufficient skills and performance to control the management and
accelerate the performance of the company. It also needs some sort of independence which will
accelerate them to get the peak of success. One thing they should keep in mind that companys
progress and stakeholders future only depends on their integrity and skills.
3.1.4 Other Stakeholders interest:
Company has responsibilities for both shareholder stakeholders and non-shareholder
stakeholders. If their non-shareholder stakeholder wants advice related to their company then
Town Regeneration Partnership Company should provide those information tactfully. They have
to keep in their mind that they have legal, contractual and social obligations to both non
shareholder stakeholders and shareholder stakeholder.
3.1.5 Encouraging about the rights of shareholders:
Shareholders have several rights on their company. If they dont know properly about those
rights then company should inform their shareholders about the rights and responsibilities
shareholders withhold. Town Regeneration Company should respect the rights of their
shareholders and has to help to exercise them properly.
3.1.6 Shareholders participation in Management:
Town Regeneration Partnership Company should encourage their shareholder to participate in
companys management. Shareholders have to take part in both profit and loss of the company.
They have to think of that company as their own company.

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4. Influences on the effective performances of corporate governance:

Good governance standards now-a-days has become very effective. Shareholders both in
emerging market and developed markets are willing to pay high premium for good governance
system. So establishment of corporate governance is mandatory for our corporate progress. In
order to evaluate the effectiveness of corporate governance, one should focus on the corporate
governance outcomes rather than corporate governance mechanisms. It should be noted that
mechanisms of corporate governance can be varied country to country but the outcome is fixed.
Reducing agency conflict should be the aim of todays corporate governance. Confliction of
interest between shareholders and managers happen because of the agency problem (Talbot L.,
2012).
We can give example of Turkish corporate governance system. Turkish corporate governance
system generally depends on the ownership structure. From their independence Turkey is one of
the civil law countries which is dominated by Muslims. Because they are civil law country they
give emphasis on the controlling shareholders. They dont give emphasis on capital market.
Turkish capital market has different characteristics like down flow of liquidity, increasing rate of
cost of capital and fixed new capital formulation. So they dont give importance on the capital
market as it is not a valuable or important source of fund. Developing an equity culture is one of
the key corporate governance issues. The risk of investing in Turkish capital market has been
increased because of the temporary in the legal and regulatory framework. The country can take
substitute corporate governance mechanisms when the protection of the investor is low. The
substitute governance mechanism includes compulsory dividends, concentrated ownership and
determined or fixed reserve requirement. To determine the characteristics of the poor corporate
governance is very important. If we want to measure the corporate governance system, firstly we
have to determine the characteristics of poor corporate governance system. Performance of
corporate governance can be measured by three ways. They are:

Entrepreneurs willingness to spread or make IPO (initial public offerings) of stock in the

market.
Determine the private beneficiary of control which is paid by the investors by the voting

premium.
Experimenting or analyzing both internal and external markets of corporate control.
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If we illustrate these three points then we can find that investors pay premium for voting stock
which is an indication of poor governance. Private benefits of control are being received by the
investors that point proves. Moreover, if the governance system performs well then investors will
be interested to buy or purchase publicly traded companies share. For better corporate control,
Poor managers should replace with the newer one. Enthusiastic and efficient managers are
needed for well-furnished corporate governance.
All these three measurement is used to measure or evaluate the performance of corporate
governance. If the governance system is poor, it is better to make change in the management.
Taking over scheme or appointment of new management is better than expensive bankruptcy
proceedings. Now we can come to the point that successful and effective corporate governance
can penalize the poor management or CEOs if needed. In the relationship of CEO turnover,
ownership structure holds an important role. In corporate performance ownership structure is
also as important as CEO turnover.

5. Structure of the Board of Directors and their characteristics:

Before going to the core analysis of broad of directors, we will give will a brief of World
Disney Company which is the leading entertainment company of the world. It has five business
segments. They are parks and resorts, studio entertainment, media networks, interactive media
and consumer products. Now we will give a brief of their structure of board of directors and their
responsibilities. Town Regeneration Partnership Company can follow Disneys structure. World
Disney Company has some rules that their board of directors should not be less than nine or
more then 21 directors. There are some characteristics of the board of directors. These
characteristics are almost same for any companies. They are given below:

Each director should be concern about the interest of the stakeholders.

Each Director should have values like honesty, integrity and commitment. They should

keep themselves away from hindrance of thought and judgment.

Each director shall give sufficient time and energy for the welfare of the company.
Each director should attend meeting like shareholders meeting, meeting of the board of

directors and so on.

Standard of independence should be met by the board from the company.
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The board of directors should be skillful and efficient. By applying their knowledge or
skill they should try to reach the peak of success.

5.1 Responsibilities of the Board of Directors:

One of the main responsibilities of the board of directors is to oversee the organizations
procedures and policies designed in order to make compliance with companys both

ethical and legal business conduct.

Board of directors has responsibility of selecting employees and CEO, CFO for their

companies. They have to select them very carefully.

They have to give bonus to the employee according to their job performance. They

should manage incentive compensation in addition to base salaries.

Managing and evaluating performance is another responsibility for the board of directors.
They have to manage it carefully as it is a tough work to do. They have to fire or
eliminate poor performer or give warning for their performance. They can also provide

proper training for the employees.

They should evaluate the performance of the CEO and make change if required.
Company has many long term and short term strategic and business plan. Board of
directors has to choose the appropriate plan from those. So plan which has future

implication and also has greater productivity, directors should choose that type of plan.
Board of directors has to maintain liquidity plans for the company. They have to manage

current liquidity for their day to day task.

The Board should evaluate the overall performance of the company annually. Then they

will take necessary steps about what to do in future progress.

The financial committee, audit committee and the remuneration committee supports the
boards work. The board appoints the chairman and executive committee annually and

they do it very carefully.

The corporate governance policy is reviewed and approved by the board of directors.
Reviewing companys financial plans and strategies.

6. Different Types of Stakeholders:

The achievement of an organizations objectives is being affected by more than one individual.
Those groups of individual are known as stakeholder. Confusion can be raised between
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shareholder and stakeholder. They are not same. All stakeholders are not shareholders but all
shareholders are stakeholders. So a big difference between stakeholder and shareholder we can
watch out. There are several types of stakeholders. Stakeholders can be an individual or group.
Stakeholders can an individual or group or organization, but it should have interest in another
entity. Different types of stakeholders are described below:

Legal stakeholder:

Legal stakeholders are those who have possession of something precious. So to be a legal
stakeholder, an entity or individual should have valuable things like documents or property or
money. He will be called a legal stakeholder until the real owner is found. The lost-found
departments can an example of legal stakeholder or stolen section of police department can be
another example of legal stakeholder. Those will be called legal until the main owner gets found.

Individual:

We have already told that individual or group anyone having interest in an organization or entity
can be called stakeholders. Individual customers, investors or shareholders can be called
stakeholders because they do have monetary or nonmonetary in an organization. Investors can be
told monetary shareholders of a company because of purchasing share of a company, thats from
an investment standpoint. Residents are also stakeholders from the sight of neighborhood
assistance.

Community Interest:

A branch of interest who are awaiting for a citys arrival of new transit system is an example of
community or project stakeholder. Fruition through project management, planning and
implementation are those matters that stakeholders feel interest.

Corporate Investment:

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Different groups of stakeholders exist within the context of corporate governance and activity.
Employees do have interest in corporate success because they invest or devote their time, energy
and talent or brain for the betterment of the corporation. Employees are provided with bonus or
other facilities for their dedication or time. There is another type of stakeholder. The board of
directors is another type of stakeholders.

The board of directors expects that the whole

company will accept their guidance and follow their leadership. They expect that the CEOs also
cooperate with their leadership. There is another type of stakeholders. They are the user or
customer or clients of an organization. They have interest in the productivity of the company as
they expect better quality of product from the company.

7. Importance of Group Cohesiveness and Group Dynamics:

We can define groups by different definition. When more than two people come together to
accomplish a same task can be called a group. The main motto of a group is to work together and
to accomplish the task properly. But it is possible to occur group confliction. So every group
member must be concerned about the confliction which can be happened any time. The
attitudinal and behavioral characteristics of a group are called group dynamics (Donelson R. F.,
2009). Structure of groups and forming of groups are both included in group dynamics. How the
group will function is also included in group dynamics. So group dynamics plays an important
role in organizational sector.
Thyer & Lawler (2002) assumed that all organizations actually depend on the people who
actually work in or for the company. So company has to motivate their employees in order to get
the expected output from them. So they have to apply some motivation strategies. By following
those strategies board of directors of an organization will get direction to their employees. They
have to setup groups who will serve for the purpose. So in order to get the final outcome, group
cohesiveness and group dynamics has to be applied or maintained very carefully. Tactics and
strategies wont be effective if the employees get motivated perfectly. So board of directors of an
organization has to apply those tactics after motivating their employees.

8. Conclusion:

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We can conclude that corporate governance plays an important role through maintaining the
companys overall activities. Boards of directors play an important role also by maintaining this
corporate governance. So in order to keep an organization going or keep its success pace, strong
Corporate Governance has to be maintained and followed properly.

9. References:

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1. Alan Calder (2008), Corporate governance: A practical guide to the legal frameworks and
international codes of practice, First Edition, Kogan Page Publishers, page.173
2. Alex Knell (2006), Corporate Governance: How To Add Value To Your Company: A
Practical Implementation Guide, Butterworth-Heinemann, page.264
3. Bob Tricker & Robert Ian Tricker (2012), Corporate Governance: Principles, Policies and
Practices, Second Edition, Oxford University Press, page. 415
4. Catherine Turner (2009), Corporate Governance: A practical guide for accountants, First
Edition, Butterworth-Heinemann, page.204
5. David Larcker & Brian Tayan (2011), Corporate Governance Matters: A Closer Look at
Organizational Choices and Their Consequences, FT Press, page.210
6. Donelson R. Forsyth (2009), Group Dynamics, Fifth Edition, Wadsworth Publishing,
page.638
7. Frederick D. Lipman & L.Keith Lipman (2006), Corporate Governance Best Practices:
Strategies for Public, Private, and Not-for-Profit Organizations, First Edition, Wiley & Sons,
page.173
8. Jacques Lenoble & Marc Maesschalk (2003), Toward a Theory of Governance: The Action of
Norms, Kluwer Law International, page.219
9. Jonathan R. Macey (2008), Corporate Governance: Promises Kept, Promises Broken, First
Edition, Princeton University Press, page.312
10. Lorraine Talbot (2012), Progressive Corporate Governance for the 21st Century, First
Edition, Routledge Publisher, page.88
11. Mark J. Roe (2006), Political Determinants of Corporate Governance - Political Context,
Corporate Impact, Third Edition, Oxford University Press, page.85
12. Robert A. G. Monks & Nell Minow (2008), Corporate Governance, Fourth Edition, John
Wiley & Sons, page. 316

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13. Robert Cobbaut & Acques Lenoble (2003), Corporate Governance: An Institutionalist
Approach, Kluwer Law International, page.197
14. Robert Ian Tricker (1994), International Corporate Governance: Text, Readings, and
Cases, Illustrated Edition, Prentice Hall PTR, page.493
15. S.R. Thye & E.J. Lawler (2002), Group Cohesion, Trust and Solidarity (Advances in Group
Processes), First Edition, Emerald Group Publishing Limited, page.120

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