Co Governance

8/9/2019 Co Governance

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Corporate governance is the framework of laws rules, and procedures that regulate the

interactions and relationships between the providers of capital (owners), the governing body

(the board or boards in the two-tier system), seniors managers and other parties that take part

to varying degrees in the decision making process and are impacted by the companys

dispositions and business activities. Corporate governance defines their respective roles and

responsibilities and their influence in steering the course of the company or Corporate

governance refers to the set of systems, principles and processes by which a company is

governed.

They provide the guidelines as to how the company can be directed or controlled such that it

can fulfil its goals and obectives in a manner that adds to the value of the company and is

also beneficial for all stakeholders in the long term. !takeholders in this case would includeeveryone ranging from the board of directors, management, shareholders to customers,

employees and society. The management of the company hence assumes the role of a trustee

for all the others.

Corporate governance has become a bu"" word in the business management field. #wners of

businesses of all si"es are employing the concepts of corporate governance to develop a

strategic plan for operations. This includes systems and procedures designed to structure

authority, balance responsibility and provide accountability to stakeholders at all levels. $n

essence, corporate governance is about balancing profitability with sustainability.

%anagement on the other hand refers to the actions taken by a company to lead the business

in a positive direction. &'amples of management include setting budgets, giving staff

members directions and making strategic plans about marketing or product development.

Corporations usually have management teams once the company becomes too big for the

founder or one individual to oversee the entire business. %anagement team members include

titles such as department head, director, vice president and manager, chief e'ecutive officer,

chief operating officer and chief financial officer.

They also differ in the following ways

overnance comes from the word govern,* which means to control the actions of a group

for the benefit of the whole. $n the business world, this refers to policies that specifically

restrict or direct how people can act. +or e'ample, governance policies might include

prohibiting a board of directors from awarding contracts to board members companies or the

companies of family members. business might reuire its accounting department to have


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two signatures on any check it writes to reduce the threat of fraud. Corporate governance

therefore differs from management in that governance is primarily about protecting a

business, while management is more about growing it. overnance refers to the policies and

procedures set in place to ensure a business operates within the law and for the optimal

benefit of all stakeholders. %anagement refers to the techniues e'ecutives use to help the

company operate

They also differ in functions whereby cooperate governance has the following core

functions

Strategic direction. &'ercising effective leadership that optimi"es the use of the financial,

human, social, and technological resources of the program. &stablishing a vision or a mission

for the program, reviewing and approving strategic documents, and establishing operational

policies and guidelines.

Continually monitoring the effectiveness of the programs governance arrangements and

making changes as needed.

Management oversight. %onitoring managerial performance and program implementation,

appointing key personnel, approving annual budgets and business plans, and overseeing

maor capital e'penditures. /romoting high performance and efficient processes byestablishing an appropriate balance between control by the governing body and

entrepreneurship by the management unit. %onitoring compliance with all applicable laws

and regulations, and with the regulations and procedures of the host organi"ation, as the case

may be.

Stakeholder participation. &stablishing policies for inclusion of stakeholders in

programmatic activities. &nsuring adeuate consultation, communication, transparency, and

disclosure in relation to program stakeholders that are not represented on the governing

bodies of the program.

Risk management. &stablishing a policy for managing risks and monitoring the

implementation of the policy.

0heres the functions of management is include the following but they vary by program si"e

and type, partnership arrangement, legal arrangement, etc. Though the proceeding list is not

e'haustive, seven general functions of management are as follows1


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Program implementation. %anaging financial and human resources.

2eviewing proposals for inclusion in the portfolio of activities and allocating financial

resources among activities.

!upervising the implementation of activities. Contracting with implementing or e'ecuting

agencies to implement individual activities. &nsuring that these agencies are self-monitoring

and reporting their progress in a timely way.

Regulatory compliance. &nsuring compliance with all applicable laws and regulations at

the international, national, and institutional levels, including the regulations and procedures

and adhering to these reuirements and standards on a day to day basis.

Reviewing and reporting. Taking stock of the overall performance of the portfolio in

relation to the programs obectives and strategies. 2eporting progress to the governing body,

including any adverse effects of the programs activities.

They also differ in activities as follows

Common overnance ctivities

3usinesses benefit from written policies and procedures that allow leaders to avoid specific

conflicts of interests and fraudulent activities before they happen and to detect any fraud that

might occur. %any governance policies pertain to financial activities, setting procedures for

soliciting and awarding contracts, accounting practices and disbursing profits. 3usiness set

strict rules for human resources activities that fall under state and federal guidelines. 0hen a

corporation becomes a public company, corporate governance e'pands to include following

!&C rules and providing transparency for shareholders. 4nlike company policies that govern

the behaviour of individual employees, such as dress codes or grievance procedures,

corporate governance policies pertain mostly to the operations of the business.

Common %anagement ctivities

%anagement activities help a business operate, with instruction from top leaders directing the

activities of staff members. Companies create plans for developing, pricing, promoting and

distributing their products, put systems into place to oversee their plans and review and assess

their proections and performance. Companies manage their employees by training workers to

help them perform better. nalyses of operations help management to determine if the


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company needs to change any practices, such as bringing contracted work in-house or vice

versa, setting new goals, modifying the marketing mi' and monitoring financial performance.

+urthermore 3oard of directors govern an organi"ation, while the C and his team manage

the organi"ation. Cooperate overnance is overseeing the corporate policy implementation

for fulfilling all the stakeholders5 e'pectations. overnance includes, discharging of1

&conomic, 6egal, &thical and !ocial responsibilities. %anagement5s ob is prudent utili"ation

of corporate resources for sustainable growth and development by creating competitive

advantage through research, innovation and development of intellectual capital. 7ecision

makings 8 control, are integral part of both governance and management.

Corporate governance is not an abstract goal, but e'ists to serve corporate purposes by

providing a structure within which stockholders, directors and management can pursue most

effectively the obectives of the corporationwheres &ssentially, the role of managers is to

guide the organi"ations toward goal accomplishment. ll organi"ations e'ist for certain

purposes or goals, and managers are responsible for combining and using organi"ational

resources to ensure that their organi"ations achieve their purposes.

Corporate governance describes all the influences affecting the institutional processes,including those for appointing management (controllers and9or regulators, involved in

organi"ing the production and sale of goods and services). 7escribed in this way, corporate

governance includes all types of firms whether or not they are incorporated under civil law

Company-with corporate governance, enable the management supervisory function of the

directors to be separated from the business e'ecution function of the e'ecutive officers. The

e'ecutive officers perform decision-making and business e'ecution, as entrusted by the

3oard of 7irectors. The content of this business e'ecution is subect to the oversight of the

3oard of 7irectors and to audits by the udit Committee, which enhances effectiveness,

validity, legality and soundness of the management.

How the two relate

Corporate governance and management are most often viewed as both the structure and the

relationships which determine corporate direction and performance. The board of directors is

typically central to corporate governance. $ts relationship to the other primary participants,

typically shareholders and management, is critical. dditional participants include


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employees, customers, suppliers, and creditors. The corporate governance framework also

depends on the legal, regulatory, institutional and ethical environment of the community.

0hereas the :;th century might be viewed as the age of management, the early : the shareholders and the stakeholders> different types of shareholders

(mainly the large shareholder and the minority shareholders)> and the prevention or

mitigation of these conflicts of interests. Corporategovernance is a field in economics that

investigates how to secure motivate efficient management of corporations by the use of

incentive mechanisms, such as contracts, organi"ational designs and legislation. This is often

limited to the uestion of improving financial performance, for e'ample, how the corporate

owners can secure9motivate thecorporate management whichwill deliver a competitive rate

of returnor Corporate governance is about how investors get the managementto give them

back their money corporategovernance is gathering together a group of smart, accomplished

people around a board table to make good decisions on behalf of the company and its

stakeholders.

Corporate governanceand managementis the relationship among various participants ?chief

e'ecutive officer, shareholders, and employees@ in determining the direction and performance

of corporationss /rofessor !ir eorge 3ain once said, the big advantage of the shareholder

model over the stakeholder model in management terms is the simple goal it presents1

ma'imise shareholder value. =o such simple target attaches to the stakeholder approach, and

yet without a clear goal, management faces an impossible task in trying to do its ob properly

$n conclusion &ffective corporate governance and management are key mechanisms for

ensuring that an organisationAs strategy is effectively delivered within thresholds agreed by


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the 3oard and the e'ecutive. $t involves a comple' set of relationships between a companyAs

management, its 3oard, its shareholders and other stakeholders. Corporate governance also

provides the structure through which the obectives of the company are set, and the means of

attaining those obectives and monitoring performance are determined. management is the

culture, processes and structures of an organisation which when articulated into policies to be

implemented at all levels of the organisation, ensure that the goals of the organisation are

achieved in order to attain the reuired outcomes and enduring benefits to the organisation

and hence growth of the organisation

Documents

Co Governance