Corporate Governance- why not feeling good?

The more discussions and trainings I conduct, more people walk up to me and complain about the state of governance in corporates. This was demonstrated in a feature article in one of the local magazines about ‘Rogue Finance Companies’ and what insiders were commenting about their companies. All the positive vibes I try to let out by saying that such events have increased the level of awareness and compliance and contributed to a general improvement in this sphere gets doused with all the negative comments.

Some people say that with all the recent laws, codes, forums, seminars and literature that are copied in the country, we are trying to drive a Rolls Royce on the roads suitable for bullock carts. Like the problems of a bullock cart are more about the lack of steering wheel, the absence of a braking system, uncomfortable seating and the unhealthy release of waste…. The problem about governance may not be the road but the vehicle used to achieve the desired objective.

Key problems of corporate governance are transparency, independence, and composition of the Board and it’s sub-committees. They’re in a way the problems of a bullock cart and the bulls and our Boards should get past the cart and advance to an automobile. This will be a more progressive form with better steering (strategy and direction), better braking system (risk management), better seating comfort (transparent, independent composition of members) and last but not the least better release of waste (sustainable business practices) to address the inherent issues in good governance. These symptoms should be addressed by corporates before looking at the road they have to travel and say that it’s not suitable for a Rolls Royce.

Corporate governance cannot be optimized only by addressing these issues by new laws and codes, no matter how aggressively enforced. This is not to mean that monitoring and enforcement are not important. Because the evidence for non compliance is not so much as black and white. The issues on independence and composition are symptoms that lead to greater problems that cause the ill feeling about the state of governance in corporates in the country. So, I wish our Boards will get past the carts they’re driving to an automobile to be more progressive in eliminating the root cause for failures with good independent directors, a balanced-diverse composition, good sub committees to assist the board and a transparent process for nomination, remuneration and audit functions. Thereby, let the road- regulations and monitoring develop at an acceptable speed, as they won’t have to react to emergencies in the short term.

Advertisements

About surenraj

“Views expressed are my own”
This entry was posted in Governance and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s