Changing Corporate Governance

Change Management KGA

Juanaquee Koen October 3, 2010

Changing Corporate Governance

2010

It is October 3, 2010and some believe that we are still in the middle of a recession. Others would argue that according to the GDP (Gross Domestic Product) we have been out of the recession for more than a year. And there are still others who say that there are no jobs, very few companies are hiring, and unemployment in America continues to rise. Furthermore, many companies are still laying people off. How did we get in this mess? What happened to the days of booming business, new business start-ups, and record earnings? Corporate irresponsibility is what happened. This is evidenced by an extraordinary amount of corporate scandals over the last several years. In this paper, I will attempt to provide solutions to change corporate governance in America, provide a model depicting a structure change, and show how corporate governance changes will make a difference. Corporate governance is a system where corporations are directed and controlled. A typical corporate governance organization consists of owners, board of directors, managers, employees and stakeholders. The first change that I will incorporate is to separate the roles of the chairman and the chief executive Secondly, I would screen and select board members thoroughly. Thirdly, I would change the current tax system by increasing the taxes of those making $250,000 or more a year and decreasing the tax rate for the middle class and those making less than $250,000 per year. Fourth, I would restructure the current stock market system by adding changes and more restrictions to the Comply or Explain and Comply or Else governance guidelines (Ghillyer, 2010). Finally, I would revamp pay rates to reflect equal pay across the board regardless of gender, race, or religion. Furthermore, I would insure that all employees (regardless of job title) receive a fair portion of the profits payable on a quarterly basis.

Changing Corporate Governance

2010

Corporate Governance Structure Change Model

CEO

Chairman

Audit / Compensation Committee

Board of Directors

Corporate Governance Committee

Changing Corporate Governance

2010

To be an effective corporate governance committee, the following steps should be taken: Create a climate of and candor. Foster a culture of open dissent. Mix up roles. Ensure individual accountability. Let the board assess leadership talent. Evaluate the boards performance (Ghillyer, 2010).

Earlier I discussed making changes to corporate governance. Below are reasons why and how these changes will make a difference. Separating the roles of the chairman and CEO will set the tone of the organization and reinforce checks and balances. Screening and selecting board members thoroughly will insure that they are qualified, able to use sound but ethical judgment, and have a thorough understanding of their role in corporate governance. Increasing taxes on the rich and decreasing taxes on the poor will definitely make a difference by decreasing the gap in incomes. Restructuring the stock market will help punish firms that invest in top line growth and reward those shrinking to their profitable core in an effort to restructure balance sheets (The Economist, 2010). Finally, revamping the pay rate structure so that the less fortunate are not struggling to survive or forced into poverty will help establish a balance in the standard of living.

Changing Corporate Governance References Ghillyer, A. (2010). Business Ethics: A Real World Approach. New York: McGraw Hill,

2010

Profits, but no jobs: How long can corporate Americas profit rebound continue? (2010). The Economist.