Understanding Corporate Governance Principles

• Corporate governance involves the practices, rules, and processes by which an organization is managed and controlled.
• It balances the interests of stakeholders like shareholders, management, customers, and the community.
• Corporate governance provides a framework for achieving company objectives across all management areas.

Benefits of Corporate Governance

• Creates transparent rules and controls.
• Provides leadership guidance.
• Aligns stakeholder interests.
• Builds trust with investors and public officials.
• Gives stakeholders a clear idea of the company's direction.
• Promotes long-term financial viability.
• Facilitates capital raising.
• Can improve stock prices.
• Reduces potential for financial loss and corruption.
• Acts as a resilience and long-term success plan.

Intimidation

• Rules
• Processes
• Policies and Standards
• Audit
• Transparency
• Monitoring
• Integrity

Strategic Governance

• Strategic governance manages change and sets strategic priorities.
• It maintains focus on core business and establishes systems to support strategic goals.
• A strategic governance model aligns strategy, operations, and compliance, helping organizations achieve their mission.
• This model allows quick responses to business changes like customer needs and emerging technologies.
• It enables risk management, legal compliance, and addresses stakeholder expectations.
• Strategic governance focuses on being strategic at the core to ensure long-term organizational success.

Significant Practices of Strategic Governance

• Ensuring sound strategic governance that upholds the vision, mission, and values of the organization.
• Ensuring board members are aware of their responsibilities to each other and the organization.
• Strategic plan serves as a guide for the board, management, and all stakeholders.
• Supporting the goals within the strategic plan.
• Establishing clear policies and processes to direct the strategy.

Inspiration

• Storytelling
• Vision
• Setting and Managing expectations
• Stimulating creativity and innovation
• Shaping culture

Operational Governance

• Operational governance focuses on critical operating decisions and their execution.
• It provides a framework for managers to make better decisions and improves ORM.
• Integrating operational governance in GRC programs allows for process adjustments, anticipating future events, and managing risks.
• Shared, centralized policy information is a foundation for operational governance.
• Accessible information throughout the organization prevents independent groups from operating in isolation.

Instruction, Infrastructure and Information

• Policy development and management
• Decision-making processes
• Risk Management Processes
• Issue Management Processes
• Control and Compliance management processes
• Alignment of activities and action
• Oversight and Insight

Governance Orientation

• Key actors define the organizational culture.
• High performance requires a culture of governance with business ownership and involvement.
• Achieving the culture of governance requires strategic and operational governance.
• Strategic governance uses inspiration to control and influence.
• Operational governance uses instruction, infrastructure, and information for control and influence.
• Intimidation uses external threats for influence.
• Inspiration encourages employees to go beyond their roles and overcome difficulties, fostering creativity.
• Instruction involves rules and steps for consistent work.
• Infrastructure provides necessary systems to support consistent roles.
• Information involves feeding aggregated organizational oversight into the system.
• The airline industry uses checklists to apply governance at the pilot level, ensuring consistency.
• These reminders provide consistency while allowing freedom to act.
• The airline industry incorporates lessons from incidents into checklists unlike the oil industry with the BP explosion.
• The operational governance layer provides frameworks to standardize practices.

The Link Between Governance and Performance in the Corporate World

• Leadership and governance are interconnected.
• Success requires a clear plan of what needs to be achieved.
• Important factors include strong relationships between management and the board, trust, challenge, a common goal, and information flow.
• Governance must be understood and acted upon throughout the organization.

Generic Good Governance Framework

• Participation: the core element of good governance, requiring:
• Engagement
• Freedom to the citizens: citizens participate in decision-making, articulating their concerns.
• Decision making and challenge
• Rule of Law: governance must be supported by a fair legal framework and an independent judiciary.
• Authority and structure
• Transparency: free flow of information and accessibility for those affected by decisions.
• Transparency and audit
• Responsiveness: institutions are now more responsive to stakeholders.
• Stakeholder management
• Effectiveness and Efficiency: using resources in line with societal needs.
• Alignment and efficiency
• Accountability: ensuring answerability and enforcing correct procedures.
• Accountability and compliance

Summary of a Good Balance for Organizational Governance

• Leadership: guiding the business in the right strategic direction.
• Challenge: executives lead effectively and are accountable.
• Oversight: appropriate controls and risk management are in place.
• Robust questioning: ensuring actions align with stakeholder interests through debate

Additional Considerations for Governance

• Good management practices are essential for effective governance.
• Compliance with regulations alone is insufficient without good management.
• Organizations with a purpose beyond profits tend to perform better, aligning with Maslow's hierarchy of needs.
• Maslow's hierarchy includes deficiency needs which are esteem, friendship, love, physical needs and security.
• Individuals focus on higher-level needs once basic needs are met.

Key Characteristics of Self-Actualized People

• Acceptance and Realism: realistic perceptions of themselves and the world.
• Problem-centering: concerned with solving external problems.
• Spontaneity: spontaneous thoughts and behavior, open to new experiences.
• Autonomy and Solitude: need for independence and privacy.
• Continued Freshness of Appreciation: viewing the world with appreciation and wonder.
• Peak Experiences: experiencing moments of intense joy and awe.