Corporate Governance is a very important aspect of every organization and for the organization to excel in this aspect, there should be proper implementation of Corporate governance principles across all structures and processes of the organization.
However, more often than not, the way different teams and individuals relate may dictate the implementation or success thereof of any strategy, policy or framework. There has to be a level of understanding of roles of each player in order to properly implement and derive positive results.
Lack of understanding of roles may lead to imbalance in functions and the Board. In this article we will address at least two ways in which balance may be created for Management and the Board to effectively implement corporate governance.
1.Too much power on one or more individuals. The Board has the responsibility to ensure that all corporate governance enablers work together efficiently. Though there are defined roles for the Board to function well, there are situations where power lies with one individual in such a way that it hackles the proper functioning of others, hence, they are not able to apply themselves. That individual has the power to control decisions and actions taken. Most times it is for their own benefit rather than the company. It is the role of the Board to identify such individual and find wisdom to balance them out.
2.Scales tipped towards Management. There are instances whereby the effectiveness of the Board is limited by Management. This can be through Management intentionally not providing adequate information to enable the Board to make informed decisions, making decisions without knowledge of the Board and expecting them to seal those decisions or maybe suffocating processes and structures in such a way that it deems the Board monitoring oversight ineffective. The Company Secretary and the Non – Executive Directors should play a role in ensuring that the Board effectively carry out its mandate. In instances where the scales are tipped off towards one group or individual, the Company Secretary as the advisor and “sounding board” for the board, may intervene and provide proper advice and guidance to balance out the scales. The presence of the Non-Executive Directors in the Board is to instill independence and balance. Their voice needs to rise up above everyone else, ask the difficult and challenging questions, direct proper reporting and monitor progress. These actions, provide a platform for the growth and development of all parties in order to properly implement corporate governance. The results may not be immediate as there may be resistance but will be visible in the long term.
Mpho Moletlo Kgosietsile (ACIS), MSc Corporate Governance