“GOOD CORPORATE GOVERNANCE”

Municipal authorities had struck on a new source of revenue, about twenty-five years back.
While attending a meeting at the seminar of industrialists, to deliberate on this new weapon of Corporations, a green horn asked of a successful stalwart,
” How to solve the problem of these Octroi regulations. If we have to send for processing, the same crankshaft six times in and out of two adjacent Corporation boundaries, it is a great hassle. Can you please enlighten us, as to how do you solve the problem?”
The industrialist shook his head. Gave a smug look of a person, knowing the worldly ways and said publicly,
“We manage; I shall give the details privately.”
He was hailed as the leader, and everyone, was striving to emulate him and his style.
No longer.
VALUE- DRIVEN ORGANIZATIONS

As the saying goes, everything is fair in love, war and business.
In an era where most organizations world over, abide by distinctly defined value systems and are proud to pay their lawfully levied taxes, government dues, etc. such mentality is passé.
The young budding executives appearing; for interviews to please note; the difference in the way; organizations now, view value systems in running the businesses.
Earlier on, expediency was the watchword. Now it is integrity. "Walking the talk", as General Electric, would put it.
A talk of managing is taboo, now. No manipulations are tolerated.
With the globalization of businesses, a need to adhere to a universally accepted value system has become an imperative. You can't tolerate corruption, in certain countries and frown at the same in others. There are many organizations that abide by a distinct value system and are eminently successful too.

WHAT DOES IT IMPLY?

Good governance for an organization implies that the policy makers of the organization PROVIDE, POLICY AND RESOURCE SUPPORT.
Generally the Board of Directors is vested with this responsibility. There are others who implement the policy, translate it into day-to-day business, operations. The top gives guidelines, a direction, in which the organization should move.
The resource support is given to various functional heads to operate effectively. Integrity is expected of the total system, while dealing with the internal and external surroundings. The organization’s policy is always kept in view, in transacting business operations.

While framing the policy its content should have the following:

• VISION: Involving the ideals and philosophy of the company. Envisioning the future, what you want to see the organization after say twenty years. An example can be cited of Soichiro Honda, who founded the Honda Empire, in 1948. He clarified the vision for the company, “We shall make the best two wheeler in the world.” All of the thirty employees, their total strength, then, applauded their approval. They did so too later in competition with established names from Germany, Britain. They also went to build great cars later.

• MISSION: What type of products and services will it provide? A qualitative outlook is provided, what do they see the organization to be in the next two to three years?
Toyota had set a goal to make a green car, with least pollution. Which they have achieved, since.
• GOAL: What, are the intermediate outcomes you expect from the various functionaries. Quantitative measures to be provided here, to gauge the performance, vis-à-vis the defined goals. Amazon.com has set a goal to pack 30 orders per hour per employee.

• OBJECTIVES: Splitting of goals into various tasks to achieve the goals. Sundaram Fasteners set an objective to bring their quality standards to Six-sigma level, and are the best supplier to General Motors, for radiator caps, globally.

• ACTIVITIES: A set of behavior spelt to achieve the tasks defined earlier. At the level of an operator it is essential to clarify what you expect of him in specific terms, such as, regular attendance, punctuality, cleanliness about the work- surroundings, the speed of the machine, the rejection rate, to be within a pre-set figure, etc .An example can be cited of an eatery, where within ten minutes of placing the order the customer will be served. If not he gets a rebate ,in his check

RESOURCE DEVELOPMENT ACTIVITY

The support activity, also involves the upgrading of the resources .For example it is not adequate, for H.R. dep’t to just recruit 50 warm bodies. They have to be converted to a resource, by a proper developmental training, such as to equip them to contribute functionally. . This is termed as the resource development activity.
Good governance also implies a monitoring and review device at both the policy and administrative levels.
Rotary International has undertaken a monumental exercise, i.e. to eradicate POLIO from the face of mother Earth, by the year 2005. Although they are a voluntary, service organization, there is a well-set policy of monitoring the progress, and wherever required, intensive efforts are put in to realize the VISION, which everyone associated with them, is committed to.

In business situations, a review mechanism is devised to check whether the policies are followed correctly .If and when policies need any revision, it is deliberated and revised goals are set. A proper feed- back system has to be in place for this. e.g. a law and order expert should not; be appointed to look after the future education policies of the govt.

A well spelt out, set of value structure, is a prerequisite, for good governance. While interacting with the resource suppliers, competitors, and regulatory authorities, an ethical code has to be adhered to.
Dialogues should resolve conflicts. There need not be orders so, no disobeying is involved. The self-propelled individuals do not require prodding.
This is not a laissez faire culture. The change has to be brought about by a process of learning. They are taught to think in terms of the wider goals, not only their functional goals.
Project teams are set up, to take the group from here to the desired goals, by identifying their learning disabilities. Introducing concepts through illustrations, graphics, mentoring, counseling etc, .the message is driven home.

THE BOTTOM-LINE

Global 500, published by Fortune, for the year 2000, ranked General Electric, as the ninth largest company in the world, with $ 111 billion as their turnover. . They swear by a strict value system through out their operations globally. The idea was espoused by Jack Welch, who took the reins of the company in 1981, and took it, to its preeminent position until his tenure, ended in 2002. (Now the CEO is Immelt, but the value system is a constant.)
He had made it clear to all the employees that they have to adhere to a strict value code. Those who would not like to subscribe to the system can make their fortunes elsewhere.
The surprising part is that in the year 2000, as mentioned above, G.E. was ranked first, globally, at $10.7 Billion, as the highest profit earner too.
Hence the popular belief that running businesses in an ethical manner would be
a Utopian concept, and lead to an abominably low bottom-line, is all hogwash.

M. S. Ranade,
mranade@vsnl.com
PUBLISHED IN INDIAN EXPRESS, APPOINTMENTS SUPPLEMENT PUNE, ON THURSDAY, 6TH MARCH,2003.