The Board, the Executive and Good Corporate Governance
THE BOARD, THE EXECUTIVE & GOOD GOVERNANCE
Ladies and Gentlemen, this paper attempts to look at the board and individual directors in context to organisational development. To achieve this, the key roles and duties of the board and its directors will be fully reviewed in light of current corporate governance concerns. This paper relies heavily on Review of The Role and Effectiveness of Non-executive Directors – Higgs Review – (2003) and the Combined Code on Corporate Governance (2006) for referencing.
The Combined Code on Corporate Governance, 2006 states that “every company should be headed by an effective board, which is collectively responsible for the success of the company.” On the issue of an effective board, Holland and Jackson (1998) identified six dimensions of board competency that seemed to capture the elements essential to effective governance:
i. Contextual: the board understands and takes into account the culture, values, mission, and norms of the organization it governs. ii. Educational: the board takes the necessary steps to ensure that members are well informed about the organization, the professions working there, and the board’s own roles, responsibilities, and performance. iii. Interpersonal: the board nurtures the development of its members as a group, attends to the board’s collective welfare, and fosters a sense of cohesiveness and teamwork. iv. Analytical: the board recognizes complexities and subtleties in the issues it faces, and it draws upon multiple perspectives to dissect complex problems and to synthesize appropriate responses.
v. Political: the board accepts that one of its primary responsibilities is to develop and maintain healthy two-way communications and positive relationships with key constituencies. vi. Strategic: the board helps envision and shape institutional direction and helps ensure a strategic approach to the organization’s future.
Holland and Jackson concluded by saying “The most effective boards in our
Ladies and Gentlemen, this paper attempts to look at the board and individual directors in context to organisational development. To achieve this, the key roles and duties of the board and its directors will be fully reviewed in light of current corporate governance concerns. This paper relies heavily on Review of The Role and Effectiveness of Non-executive Directors – Higgs Review – (2003) and the Combined Code on Corporate Governance (2006) for referencing.
The Combined Code on Corporate Governance, 2006 states that “every company should be headed by an effective board, which is collectively responsible for the success of the company.” On the issue of an effective board, Holland and Jackson (1998) identified six dimensions of board competency that seemed to capture the elements essential to effective governance:
i. Contextual: the board understands and takes into account the culture, values, mission, and norms of the organization it governs. ii. Educational: the board takes the necessary steps to ensure that members are well informed about the organization, the professions working there, and the board’s own roles, responsibilities, and performance. iii. Interpersonal: the board nurtures the development of its members as a group, attends to the board’s collective welfare, and fosters a sense of cohesiveness and teamwork. iv. Analytical: the board recognizes complexities and subtleties in the issues it faces, and it draws upon multiple perspectives to dissect complex problems and to synthesize appropriate responses.
v. Political: the board accepts that one of its primary responsibilities is to develop and maintain healthy two-way communications and positive relationships with key constituencies. vi. Strategic: the board helps envision and shape institutional direction and helps ensure a strategic approach to the organization’s future.
Holland and Jackson concluded by saying “The most effective boards in our
References: and Bibliography Cardbury, A. Boardroom Roles. Business: The Ultimate Resource. London: A&C Black Publishers Ltd, 2006. Financial Reporting Council, 2006. The Combined Code on Corporate Governance Higgs Review, 2003 Holland, T.P. & Jackson, D.K., 1998. Strengthening Board Performance: Findings and LessonsFrom Demonstration Projects. Nonprofit Management & Leadership, Vol. 9, No.2, 121-134 Lipton, M. & Lorsch, J.W., 1992. A Modest Proposal for Improving Corporate Governance. The Business Lawyer, Vol. 48, 59-77 Murphy, R., 2006. Powers & Duties of the Non-executive Director. Accountancy Ireland, Vol. 33, No. 6, 35-37 Sonnenfeld, J.A., 2002. What Makes Great Boards Great. Havard Business Review, 106-113 Stiles, P. & Bernard, T. Boards At Work. Oxford: Oxford University Press. 2001 The Committee on The Financial Aspects of Corporate Governance, 1993. (Cardbury Report)