Corporate Governance

A body corporate is a legal person. Invention of this model of business had proved a boon for growth of trade and commerce, manufacturing and service providing to upscale the human capacity to manage the enormous size and proportion of business encompassing trans continental operations at multi location and handling diverse set of activities. The philosophy behind the concept of Corporate Culture was to de-link the human nature of Ego and Emotions with the Soul and Spirit of doing business.

The concept has to a great extent has withstood to its purpose as we see MNCs who deal with business size much more the size and magnitude of Economies (GDP) of may sovereign countries. The human force and resources of many Corporations do out number the population and wealth of many nations. On the other hand the concept of making these joint stock companies opting for going to Issues of shares and inviting capital and funds form Governments, World Bank (IFC), Financial Institutions and Banks, Strategic Investors, Collaborators and Business Partners. The Companies also go for raising equities from general public and marginal investors who put in their hard earned money to earn dividend and increase in wealth from the growth of the invested company.

Having created a joint pool of money and resources form all the above stake holders the Company becomes obliged to serve the interest of all those investors as well as their employees and customers. Since every business draw natural resources the world has realized that the Business should also meet their obligation to the natural resources and thus the matter of environment and pollution has come to the fore recently as an important issue to be addressed by each business for its activities.

The Corporate world today has taken over the reigns from social, political and natural world in terms of economic power and its cognizable impact upon all the facets of today’s life. Therefore the need for concern for Corporate Governance aroused all over and the Government, the law makers, the intellectuals, the business managers and human right volunteers all had gathered to frame laws, bench marks, regulations and watch towers to see that the ‘Tool or Engine of Economic Growth’ should not cause any adverse impact on the very concept of its beneficial and holistic purpose. To ensure that the Corporate Governance does not cause and remain detrimental to any one of its benefactor the regulators and law makers have been coming to work out various regulation and compliances the corporate management.

The most commonly used platform of corporate fund raising and wealth creation had been the Stock Exchanges and the vertical and horizontal movements of their indices have been the most pivotal indicator of the new age Global Economy, the world over. The recent spate of falling indices and southward march of stock prices have caused havoc and created a calamity equally proportion to any human epidemic and disaster. The whole world today is in the grip of fear of loss of value of human efforts which had been toiling hard to make this world a happy and prosperous society.

Everyone today is concerned about the way the enormous resources placed at the disposal of Corporate world is managed by very few people who have been entrusted by the human society to manage their wealth and resources. The events as unfolded all over resulting into loss of wealth and value have shattered the faith and trust we all had held in each other. The common man today is at loss to understand the motive of those who do claim themselves to be professionally trained and competent to manage such business vehicles. Everyone those who had some role to play in the management and regulation of the Corporate Global Business today is pointing fingers on each other to blame for this catastrophic loss of wealth and trust.

As a Business philosopher I had to go into deep meditation for soul searching and in the process I had earlier came out with my findings in my earlier written and posted Blogs at my Blog www.bms2@blogspot.com. It is Greed a very common and natural factor responsible for this calamity. The vice is not new or alien; it is very much human and found in all creatures since our inception of universe. The ancient wise people in India, China, Greece and Egypt; the entire older philosophers group had long detected this virus and they had scripted the solutions to tackle this monster. But mere words written in Books are not potent enough to quell this menace like the notification of any law is not sufficient enough to ensure enforcing of the statute. The compliance has to be enforced more from within than from outside. The sole factor capable of ensuring compliances of truth and honesty is our own conscience. So long Indians had held Ganges as their pious and worship worthy Goddess, no one had even thought of even spitting in the water what to say more about polluting it; but no longer the moral code of virtues and sin was replaced by the legal terms of legal and illegal one does not feel any heaviness on his inner Self indulging into releasing pollutants in that river – The Ganges.

Everyone today is in race of growth; Growth of physical and countable assets. We all are kids of a kindergarten chanting the rolls of numbers and with every increase in numbers we try to out beat our neighbourhood fellow in sounding and thumping our own success of achieving more. Sure we achieve more in physical; but we loose much more in our spiritual space. The more we are looking stronger and abominable we more hollow and insecure we grow within our mind. The more we earn, the more we try to make sure that we are not beaten by others. We make arrangements for camouflaging ourselves to disguise others about our motives, our mission and our achievements. In all the of Miss World peasants, the contestants speak at length about their most humanistic causes and love for animals, plants and the environment; but in real they all land up in promoting cosmetics and artefacts made from harming those very humans, animals, plants and environment. We have become a smart and expert society who could master the art of shedding tears while the spring blooms and dance loudly upon the corpses of lives.

Why should I sound so critical and snobbish? This is to provoke my readers to pause and ponder and to realize and accept the reality; which we are denying all through in our life. We are not born the way we have become; we have been baptized to the new worldly religion of manipulation and deceit in disguise of becoming ourselves more practical, more successful and to stay ahead in race of creating and satisfying our never ending Desire. The wisdom of life has been replaced with the knowledge of books and theories long rendered redundant and irrelevant. Our valour to meet new challenges and treading to new frontiers has been blunted with many ‘made easy’ guides and help books. Our faith in God and nature has been killed with religious dogmas and prejudices of hatred and revenge for maligned injustices so called ‘protectors of faith’ had implanted in our innocent mind for their purpose of enslaving our consciences to surrender before those warlords for trade in contraband goods and firearms. The relationships between friends and relatives have become a measurable commodity weighed in gifts and favours.

The solution is as simple to conceive as the problem is; we need to download Ethics, Morality in our Logical brains and intellect. The wisdom today has become a flat board of power point of statistics and graphics of numeric and geometrics, we just feed in more and more information into our soul less brain to out smart each other. The human activities and behaviour today has become more of a solving cross word puzzle than writing lovable poetries and songs of love and compassion. Even the artists today have to learn business tricks to make them saleable in their auditorium and operas to prove the creativity of God gifted talent. The management of resources has become manipulation of resources. We cut our flesh from calf to feed ourselves the treat of steak only to realize later about the reversible damage we have inflicted upon ourselves in the blinding rage of Greed.

The need of the day is to in still human values and ethics in all activities of Business; be it management of money and funds, manpower and resources, technology and scientific research, manufacturing of goods and providing services should be first and foremost tested for their usage and cause to global wealth and welfare with honesty and modesty. We have to broaden our vision to suit the need of globalizing ourselves. First we have to treat the whole world as a big united family. The loss inflicted at any section or area is essentially not anyone’s gain but a loss to everyone. We must realize that prosperity and development would remain a relative terms so long we overlook poverty and deprivation of a single soul on this planet. Time has come to see that the happiness in real terms would be attained not by making others suffer but to make everyone smile. There would be no everlasting peace if a person of a rich nation who consumes many times more energy and resources than a person living in a poor nation since he could afford by snatching the rights due to his economic or political advantage. All the resources and wealth are common and belong to all of us humans, animals, plants and natural bodies.

Recent cases of failures in Corporate Governance like of ‘Satyam’ we have noticed that so far the going was good few auditors had been enjoying their status and privileges and once the crisis was blown up they had been the first deserters of the ship without any remorse for their inability to check and detect the ill will or evil doing happening right under their nose. Those independent Directors could seek refuse in their deliberate ignorance and innocence by claiming to be not benn related to day to day works. Even the senior executives who had been involved in day to day decision and working of the Company had also tried to wash their hands by claiming the sins committed under instructions from their bosses. The whole hell had to fall upon the promoters; all right they were the people who gained from fraud by siphoning company’s funds for their own purposes. But how come (Promoters) a minority on Board could fool the majority of independent Directors who were no less competent in their field of profession and had a proven and successful history behind them allowed this evil to happen. Ignorance is no excuse; and shirking from responsibilities does not absolve those high flying board directors from their failure to safeguard general interest for whom they had been supposed to be custodian of. Similarly the high office executives were not herd of silent poor lamb and sheep or incompetent bunch of professionals so helpless enough to be ruled by their bosses for evil doing and flouting the laws.

For this I have been thinking for quite a long time and have struck an idea of ensuring a responsible and self assessed and regulated Corporate Body by structuring the management tree in following manner.

Firstly we should have a Board of Promoters who have promoted the enterprise and had ventured into the business. They have in fact conceived and mothered the business so their umbilical chord should be respected in high esteem and recognition. Their status and role should be recognized and appreciated to make them morally and emotionally burdened to protect the interest of their own as well as their ‘child’ – the business. As the promoters are mostly from one family or few friends as partners, they should be allowed to form a Board of Stakeholders or Commissioners or by any other name to make them feel that they are the mother of their company. This would save the business from ego and infighting between the promoters group to cast its affect upon the on going business of the company. There are many instances where the good going business of a company had fallen prey to infighting amongst brothers, family brothers and business partners who had preferred to kill the business of the Company to satisfy their own grudges and ego. Once their Board is separate and not allowed to interfere in day to day operations of the Business Company their infighting could continue and by settled without disturbing any day to day activities.
Secondly we need to have a set of people who are professional and proven talents in their field of Business Technology, Finance, HR and Corporate Governance and this Board should be the Board of Guardians or Governors who could scrutinize and critically assess and analyze all important decisions and actions of the Business Corporate. Mostly we read in the Annual reports the achievements of the Company without getting any idea of the opportunities lost or missed by the management under the given circumstances. This Board could come out with their analysis of the real working of the management with the available resources, opportunities and challenges. Sometime we find a company reporting a loss which could have been higher had the management not acted prudently and deftly. Such revelations can make management more responsible and combative in their working.
Thirdly the people who are working whole time for the company should constitute the Board of Directors. This Board should be authorised and responsible for running the Company. The Board of Promoters and Board of Governors are having a peer view to this Board would provide them guidance for any strategic and policy decisions. The members of this Board being whole time employees would be well authorised and responsible for their actions. They remain un influenced or brow beaten during their performing the routine task by any feudal promoter nor prompted back seat driving by any independent or nominee Director who hold office without any consequences.

The above mentioned three tier structure of the Top Management hierarchy is suggestive and need a full debate and deliberation by all concerned people and bodies of professional engaged in the field of corporate governance. But one thing has been fully established for sure after studying many cases of Corporate failure that the constitution of Board today is comprising people having conflicting interest and purposes. It is still not late before we experience more corporate report their sickness or demise due to the heterogeneous and rolly polly constitution of Board today as per Companies Act. Since revision and recasting of the Companies Act is under active consideration of the Government of India, it is high time we should debate this issue and help creating a robust and responsive structure for better and business Corporate Governance.