Chapter 3 Flashcards
top ten practical tips
what are the ten practical tips
- balance board composition
- evaluate the board regularly
- ensure director independence
- ensure auditor independence
- be transparent
- define shareholders right
- aim for long term value creation
- manage risk proactively
- follow sustainability best practices
- document policies and procedures
If all board members have the same level of experience and similar skill sets, you will not find the diversity of opinion required to rigorously challenge the company’s strategy and ensure it is watertight.
balance board composition
Greater diversity boards introduces new ways of thinking and creative methods of solving problems, which prevent directors from resting on their laurels.
balance board composition
is all about filling gaps in boardroom expertise to provide a broader range of viewpoints and a fresh perspective using strategic succession planning.
board diversity
Helps you track progress over a period of time and understand where your own strengths lie as well as give you a good understanding of the areas that need improvement.
evaluate the board regularly
________________ and __________ in the evaluation process breed confidence
and trust within the company and help you in your efforts to grow that diverse board of directors.
Open communication and transparency
Evaluations should not be a tick-the-box exercise; they should feature candid, in-depth conversations that give you real data to work with to instill a culture of continuous improvement.
evaluate the board regularly
__________ is desirable on a board that wants to break away from safe,
conservative thinking.
Independence
need directors that are not afraid to think outside of the box, rather than simply continue down the same road the company has always taken. It helps create innovation and avoid stagnation.
Forward-looking boards
are more likely to provide insights that benefit the shareholders, given their different perspective on matters.
independent directors
Undue influence over the work of audit committees and independent auditors is a concern in terms of corporate governance.
ensure auditor independence
Investors need to know that they can trust the financial reporting that an issuer makes, so independence is key to show that the reports are accurate and tell the true tale of the company.
ensure auditor independence
The previous point feeds into this one.
be transparent
essential for good corporate
governance.
transparency
The __________ and __________ to share accurate, clear and easy-to-understand information with stakeholders, including shareholders, breeds trust and solidifies a business’s reputation.
openness and willingness
This means that organizations have to accurately report the bad news as well as the good. Trying to avoid negative publicity only to be found out later is more damaging for a business and its reputation.
be transparent
Full disclosure breeds integrity.
be transparent
Shareholders should know their rights when they invest in your business and you should ensure that the rights you provide are backed up by your Articles of Association, constitution and company bylaws.
define shareholder right
Decide whether all shareholders have the same voting rights or whether different classes of holdings have preference.
define shareholder rights
Although short-term wins look good and create opportunities for publicity,
long-term value creation should be the aim of a company with solid governance.
aim for long term value creation
A business that is committed to sustainable growth is likely to be much more volatile than a company with its eye only on the short term.
(t or f)
false (less volatile)
Identifying risks is important, but taking a proactive approach to mitigate that risk before you face it is the goal.
manage risk proactively
Rather than attempting to weather the storm, it is better for the organization to avoid the storm completely.
manage risk proactively
an internal control framework and an up-to-date disaster recovery plan are all key to achieving this aim.
solid risk management process
Consumers have also started to prefer shopping with businesses that boast sustainable practices.
follow sustainability best practices
There should be easy-to-access documentation of your policies and procedures relating to shareholder rights, executive compensation, board meeting operation, the election of new directors, and more.
document policies and procedures
This ensures transparency and
consistency within the organization.
document policies and procedures
the term that describes the
situation when the goals of different interest groups coincide.
goal congruence
a concept that refers to the
alignment of goals between different levels of an organization or between individuals within an organization.
goal congruence
The extent that individuals and groups perceive their own goals as being satisfied by the accomplishment of organizational goals.
the degree of integration of goals.
two groups of organization
-subordinates
-management
direction of goals
- moderate organizational accomplishment
- little organizational accomplishment 3. no positive organizational accomplishment
- successful goal congruence
goals of management are somewhat compatible with the goals of the organization but are not exactly the same.
moderate organizational accomplishment
a general disregard or the welfare of the organization. Both managers
and workers see their own goals conflicting with those of the organization.
little organizational accomplishment
the organizational goals can be so opposed that no positive progress is obtained.
no positive organizational accomplishment
perceive their goals as being the same as the goals of the organization
successful goal congruence
HOW TO ACHIEVE GOAL
CONGRUENCE?
- Set clear organizational goals.
2.Seek Input from employees - Share organizational goals
- Designate accountable people
- Align team goals
- Share progress
IMPORTANCE OF ALIGNING
ORGANIZATIONAL, TEAM, AND
EMPLOYEE GOALS
- Goals set the tone for your organizational strategy.
- Aligned goals connect employees and teams.
- Priorities are clarified.
