No ‘Grey matter’ in Governance

Grey matter contains most of the brain’s neuronal cell bodies. The grey matter includes regions of the brain involved in muscle control,and sensory perception such as seeing and hearing, memory, emotions, speech, decision making, and self-control. People in leadership roles have a good grey matter but need to use it for the right purpose?

Most of the time decisions are not made with a black or white clear definition. Sometimes it’s difficult and other times for convenience we make them grey! It is well known that today it’s not about black or white, it about green (a common reference to the US dollar). Especially when there’s more money to be made by cutting corners, some people would prefer to turn a blind eye to governance or ethics and find a grey area to capitalize.

Recently I had the pleasure of participating at a global event where John Stumpf, chairman &CEO of Wells Fargo was a speaker. He was passionate and articulate about the importance of leadership and it’s role in governance. One of the important things he said was that, “Culture is the biggest thing and I’m the keeper of culture”. Further, in ensuring that culture permeates the organization and governance is given its highest priority their actions are about “Us not I.” Even then you would find protests against what Wells is doing and how they’re the most profitable Bank in the US being questioned by a few. The executive compensation can be challenged, etc. However, the Bank has been able to progress by increasing customer interactions and retention. The tone at the top respects a code of ethics and operates a governance system that is respectful.

However,there are many other companies, that pay lip service to governance and would beat ENRON in their manipulative style. They are supported by the audit committees who keep the auditors in check by rotating them ” for governance reasons” or reducing the fees so that they may not be able to do a proper job. Even influencing wrong accounting policies in listed companies! There are instances in Sri Lanka where the holding company directors or employees & related parties audit the subsidiaries through the audit firms they run. You may think that these are private companies, but no, these are listed companies supervised by our SEC!! May be there is a grey area of interpretation for “independence”? LThe Board of Directors should be held accountable for their actions and punished, appropriately, to avoid this cancer from spreading. But I’m sure, no action will be taken anywhere in the world, as everybody’s in the game.

About surenraj

“Views expressed are my own”
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