The main question on the minds of many at the time of the Enron scandal could be summed up in one word. – “How?”
How does a Wall Street darling collapse affecting the lives of thousands of employees while shaking Wall Street to its core?
The same could be said for some of our recent regional fiascos.
How did regulations, regulators, accounting practices and managerial incentives contribute? Can this happen again? Can it happen in your organization?
Was the cause “misconceived regulation” or “the feeling of impunity that came not from deregulation but from non-punishment.” or both, as noted by Niall Ferguson in his book “The Great Degeneration: How Institutions Decay and Economies Die.”?
The Caribbean Corporate Governance Institute (“the Institute”) is urging organisations of all sizes and sectors to conduct an urgent review of its corporate governance framework to make sure that it provides for sustainability.
We can no longer conduct business as usual in our region and business leaders must take an active role in improving the corporate governance framework of their respective entities.
As part of its mandate to improve corporate governance standards and foster executive development that is tailored for the Caribbean Region, the Institute will be hosting Module 1 of the Certificate In Corporate Governance entitled “Corporate Governance”.
The modules will be held on September 28, 2016 at the Courtyard by Marriott, Hastings, Barbados. Module 2 entitled the Board will be held on October 1- November 1.
Module 1 will be led by Professor Shahzad Ansari, Professor of Strategy & Innovation – Cambridge Judge Business School, University of Cambridge as we deliver an exceptional learning experience shaped by the highest international standards.
Persons can register at this link: https://www.caribbeangovernance.org/Events-Barbados.
Professor Ansari, to share his thoughts on the business case for corporate governance.
The Business Case for Improving Your Organisations’ Corporate Governance Framework Immediately
by Professor Shahzad Ansari MPhil, PhD (University of Cambridge)
Many organizations tend to overemphasize short-term improvements in profitability, whilst inadvertently undermining long-term investments that can generate more attractive returns over time.
In a world of big data, digitization and increasing visibility, all organizations especially businesses have come under increasing pressure and public scrutiny to be more transparent about their behaviours and activities. For example, executive compensation, bonuses and tax avoidance and tax inversion have gained widespread coverage. While social judgments on organizations may involve episodic events such as a scandal or a crisis, the awareness of being potentially under the gaze, deemed shameful or praiseworthy, can have ‘disciplinary power’ on behaviours.
Both the fear of public shame and the desirability of public praise may pressure companies into reforming behaviours and practice better governance. However, rather than depending only on external parties to expose and compare differential performance, companies have also faced pressures to proactively ‘know and showing’ their performance under self-disclosure schemes. These developments suggest that the need for good corporate governance has never been greater. Two key challenges persist.
One, many organizations tend to overemphasize short-term improvements in profitability, whilst inadvertently undermining long-term investments that can generate more attractive returns over time. This calls for adopting a long-term view but this is often discouraged by a second challenge.
This pertains to a shareholder-centric perspective as against a stakeholder specific perspective where a company needs to see itself as effectively navigating its way through an ecosystem. Ecosystems are networks of interconnected firms that depend on one another for their mutual effectiveness and survival. Constituting an ecosystem are producers (including suppliers, competitors, and complementors) from the supply side, distribution channels and consumers from the demand side, and regulators and other interested stakeholders from the institutional side.
A key challenge is to navigate and effectively navigate these complex ecosystems that requires the casting of a wider ‘systemic’ lens in relationship management and managing strategic trade-offs on a continual basis.