Corporate governance, simply stated, is the system by which all national and multinational companies are controlled and directed. There is a board of directors present at the helm that is responsible for delivering efficient managerial decisions aiming at the long-term success of the company. The role of the shareholders of the company, in this regard, is to appoint the directors such that there is an appropriate governance structure in place.
Traditionally, one of the most crucial roles that corporate governance has had to play is to ensure that all the strategic decisions are made keeping in mind the interest of those with a stake in the successful outcomes. But the times have changed and so has the roles of corporate governance. One of the basic shifts includes taking into consideration the other crucial stakeholders like customers and potential customers who are impacted by company decisions. But there is more to the story that you will find out when you read on.
The company policies, generally speaking, aim at ensuring the effective operation of a company. This has always included a lot of things like ethical conduct towards the customers, employees, and vendors. At present, the policy settings as laid by the board of directors are changing and evolving. The idea is to develop a company culture that includes a number of subtle governance cues to certify the attainment of a level of transparency in decision making. The company’s board of directors is getting more and more involved in establishing a defined structure for the organization’s purpose and possible outcomes. Presently, it also has a role to play in deciding whether the resource allocation is such that the strategic goals of the company are supported or not. The strategic goals and the resource actions can never be left to be out-of-sync.
The financial decisions are not left to the shareholders of the company anymore. The corporate board reviews and understands the statements of the company to guide the funds such that incomes and returns are maximized. The role of the board of directors in this regard is more like that of a vigilante. The board maintains the balance between short and long-term goals through keeping track of all the investment decisions.
The challenges in the road ahead for the board of directors
Any discussion about the evolving role of the corporate management remains incomplete without mentioning the challenges that the directors need to face in this changing and evolving business world. As with any kind of progress, the complexities and difficulties have increased manifold for the corporate directors in the present times.
The advent of globalization and evolvement of market economies have led to tightening of the strings by national and international governments. For the board to come up with any strategy, the rules and regulations of the government turn out to be a major consideration and constraint. Any policy that shows the minutest deviance from the government regulations needs to go to the bin no matter how good it sounds for the company.
One of the most difficult challenges they face is definitely internal. For an instance, suppose a situation where the board of directors has taken some important decisions and propagated those throughout the business. But it becomes all in vain if the manager has decided to just not listen to it. Thanks to the change of times and tides, the corporate boards now have methods and laws of disciplining managers and enforcing standards when needed.
An individual director’s dilemma is also a thing to consider when it comes to the role of corporate governance. The board is supposed to be an amalgamation of independent minds working in tandem. But, as obviously, that is not the case always. An individual director is expected to face challenges when he or she tries to put his/her point through against the board’s decisions. It is not like individual opinions will always be brushed aside. But there must be enough gravitas in his/her facts and logic to convince others of the validity of his/her opinions.
It is here that we, the K.R. Mangalam University come into the picture. To be successful in the highly competitive and advanced business world, the corporate world looks for members with a voice of their own. Such a voice has the facts and figures to support the beliefs. We take pride in inculcating such analytical skills in the students of our university. Our students are not just trained to come up with strategies but they are also adept at changing the game plan according to the need of the times. This makes them valuable candidates in the corporate scenario at present and suitable members of the board of directors in future.
We are proud to announce that as a matter of fact many of our alumni at the K.R. Mangalam University, are, at present, members of the board of directors of some of the highly renowned companies.