Profiling Corporate Governance
Corporate Governance is a Leadership/Management course that is less about two decades old. Its modules are informed initially from three sources: Law, Economics and Organizational Theory. It is a neo-modernist instrument used principally by decision-makers.
Decision-Making in the 21st century is made complex among other things by the ICT revolution in its mode, modem and media of information generation and transaction and delivery. These have the effect of multiplying the drivers of the market economy, and increase its operational variables. Also, decision-making process becomes more cumbersome due to obligations of ethics, profession, faith, government, or other relationships, thereby bringing the human mind under intense pressure and thus increasing the valence of error. How can these be contained, or in fact turned around?
Lately, research by renowned neuro-scientist, Adele Diamond (UBC, Vancouver) provided decision-makers with 21st century tactics for coping with all the above. This proves that apprehension, comprehension and dissemination of information for interaction, transaction or reprocess have entered a new mode in the new millennium, but how much of these are being mainstreamed for the accompanying mass market? Or articulated by the relevant institution, the academia, to help mankind not only in theory but in real time?
Beyond the much-touted “core” concepts of Corporate Governance (as dealt with in the 2009 CU-FISL International Conference) and which have now thrown up our latest enquiry into the subject, the latter comprises two areas: the “grey areas” (Ethics) and now the “millennial/exponential dimension” that introduced innovation. For the future promises of research these are found in NEUROSCIENCES, MINDFULNESS, MONTESSORI, et al.
Contemporary Study
It is noteworthy however that concerned institutions of the world have lately turned their attention to seriously consider Corporate Governance, often by tentative other names. The HARVARD BUSINESS REVIEW (HBR) in its February, 2012 edition, vide a template of posers had sought a make-over for capitalism, titled The Capitalism Challenge. The intro of that subject is further sub-titled (as QUERY, RESPONSE and URGENCY) below:
HBR/McKinsey (M-Prize for Innovation: THE CAPITALISM CHALLENGE
QUERY: “Capitalism might be the greatest engine of prosperity and progress ever devised, but in recent years, individuals and communities have grown increasingly disgruntled with the implicit contract that governs the rights and responsibilities of business. The global economy and the Internet have heightened our sense of interconnectedness and sharpened our awareness that when a business focuses only on enriching investors, it implies that managers view the interests of customers, employees, communities and the fate of the planet as little more than cost trade-offs in a quarter-by-quarter game.
RESPONSE: “It’s time to radically revise the deeply-etched beliefs about what business is for, whose interests it serves, and how it creates value. We need a new form of capitalism for the 21st century, one dedicated to the promotion of greater well-being rather than the single-minded pursuit of growth and profits; one that doesn’t sacrifice the future for the near term; one with an appropriate regard for every stakeholder; and one that holds leaders accountable for all of the consequences of their actions.In other words, we need a capitalism that is profoundly principled, fundamentally patient, and socially accountable.
URGENCY: “This isn’t a new challenge, but it’s more urgent than ever, not just as an effort to escape reform and regulation from the outside, but to restore the public trust, to repair the moral fabric of the system, and to unleash the innovation required to tackle the world’s most pressing and important challenges.”
(-The HARVARD BUSINESS REVIEW, February, 2012)
Deconstructing the above simply breaks up into: INTEGRATION; CORPORATE GOVERNANCE; MILLENNIUM; APPROACH and LEADERSHIP.
Expatiating, “Integration” means reassembly into one functional or organic whole; “Corporate Governance” is simply the acceptable morality of the marketplace to which every participant in a society is subscribed; “Millennium” is that out-large phenomenon of Time that arrived on every citizen of the globe since year 2000 heralding many factors of Change to which we have all been struggling to accede or subdue for control or at least manage for our own good; “Approach” is simply methodology or system of arranging our strategies and response to all these challenges with responsibility; while “Leadership” is acting that responsibility to the joy of all, that is man and God.
In every human society, above is what a responsible daily activity tries to achieve variously through the sectors of Education, Business, Governance, Hospitality, Faith, Sports, et al. How can they be brought altogether in one comprehensible whole…. avoiding the confusions enumerated by HBS above?
That “lacuna” is the template of our enquiry, a foil. The solution will fill it.
“MANAGERIALISM” HERALDING CORPORATE GOVERNANCE
On the verge of the great depression (cross-over from late 19th century) Berle and Means gave account of economic development in the US in the early 20th century, which tended to breed a powerful class of professional managers in whose hands were concentrated unprecedented economic power that were insulated from pressure of both stockholders and the larger public. In their postulation the warnings of Berle and Means even inferred that certain tenets of the democratic foundation were under threat of eventual eclipse by this new phenomenon, and this invariably triggered a trail of intellectual inquiry.
MOTIVE
By “distrust” or loss of trust, Harvard in the excerpt above is querying, what is truly in the heart of (a) man? Motive is crucial to business and ethics. Therefore compliance to business conduct no matter what is specified cannot be enforced on a rule and regardless of the myriad of legislations available. A Z. Mizruchi (University of Michigan, 1976) rightly discovered in his critique of the originating suspicions of Berle and Means about the notion of “Power and Control” (Managerialism) that there are various strands of consciousness emanating from the same phenomenon that makes it virtually impossible for any school of thought, his own among the others, the sociologists school, to categorically pitch their tent with the hypothesis of Berle and Means. Without a much better idea however they had to tamely agree in the end that this new system (Managerialism, precursor to Corporate Governance) was kind of a further extension of democracy.
Research, Analysis and Results
The second half of the 20th century however was rife with novel Management ideas especially of the humanist school, a trend that gave vent to such amusing behavioral descriptions as “peoples’ capitalism”, “soulful corporation”, etc. One common factor among them was the issue of Motive which was controversialised. What would be my motivation for taking a job for instance before I find myself(re)acting in a particular way? Many studies were conducted which queried severally the basis of motivation. At the end motivational impulse was variously thought to no longer be an outright economic factor. Values could mutate, and satisfaction become derivative. Upon this result however there are two different things to test for: (i) the research question which is Motivation and (ii) the Methodology of measure. The latter is perhaps more pertinent to the SCIENCE of Corporate Governance while Motivation deals with the curriculum that makes it up. Both will add up for Delivery.
Methodologically speaking what these series of tests and result meant was that the linear-onlymentality of deductions till that point was failing and could lead the train of discourse astray. Reliability was gone. In fact beginning from this premise the imagination of the thinkers dilated wild, some adducing that entrepreneurial motivation were no longer strictly profit-driven. This was beginning to hit at many ultra-classical economic views, but the question then was could they sustain this tempo? Sociologists, in one of their splinter schools chose to arm themselves rather with extant theories of class and social stratification, relying on Max Webber or Karl Marx. For instance Blau and Duncan’s view on Class: “defined in terms of economic resources and interest… is no longer adequate for differentiating…(those) sic in control of the large capitalistic enterprises from those subject to their control, because the controlling managers of the largest firms today (mid-20th century) are themselves employees of corporations”.
In other words a mentality emanates from this “employee” status and there is a pattern in which its implications can multiply in the operational structure in such a way that they manifest unaligned variables. After all the on-board structure which some professional managers have to present even in the face of the 2009 economic disaster is all that the world actually expects, not the conundrums of uninvestigated moral (or more correctly, amoral) biases that led to their decision making.
Verdict
Thus came the qualitative round-off to the multitude of tests and data applied to measure and then to draw inferences from those study and comparisons done on the relations of power within corporations and their implications on democratic development, in the second half of the 20th century; conclusion today being that the airspace have become far expanded and the options made available are multiplied so greatly as to completely overwhelm the streamline of ordinal mentalities in its mode and measures. The demise here of ‘one- subject approach’ to research problems was already hinting at the beginning of many factors that would later crystallize as corporate governance.
The inference here is that Corporate Governance as a discipline does not only bring together relationship among human reactants in the workplace, it also atomizes the failure of the institutions that were designed to regulate or control them. Corporate Governance also measures progress not only against expectations (or deliverables) but often against certain hidden keys that may bubble up time and again to surprise the enterprise. In this wise it means that even in the academia the velvet garbs that were once draped around the one-subject approach to problem-shooting are newly found inadequate to deal with the infinite variety of choices inherent in our time and need.
Sociologists had thought to claim their space as the discipline that was found closest to behaviourism, perhaps, but being unable to prove it (by figures and numbers) had them hitting at the blank wall inadvertently. Corporate Governance as a discipline does now make offer of a new framework for the operationalization of measured reality, as may be found for instance in the mission statement or vision statement of an organization. How each one arrives at this statement though is yet a different issue.
However the discipline of Corporate Governance is not a benevolent hydra-headed monster, only that it has its own ethical compliance framework against which the success of an organization can be measured, just as the honourable enterprise of academics does too. They are both systems, except that in the CG system output is more than the sum of the input integers, and the system may perform without necessarily subjecting self to the internal equilibrium of that entity (recall the introduction of SPVs); there are always “grey” areas to consider. And right now the latest risqué factor has been this “exponential” dimension of the new millennium. So, whether it is Ownership or Control or whatever any other issues that may be broached all are just but mere patterns of behavior among the interacting units, all sunk in an environment which is bound to throw up certain variables in the end that they themselves cannot completely appropriate.
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