The Challenge of Corporate Governance

I was recently asked by a reporter to talk about corporate governance from a humanist perspective. I was told it was one of the best answers they had every received on any topic.

1. What is your experience with Corporate Governance?

I have served on several non-profit boards, been an executive director for a non-profit organization and provided training for the board.

2. What do you see as the biggest challenge for Corporate Governance?

The biggest challenge is always oversight. There is a desire to trust staff, but the job of the governance board is not just to set the direction of the organization, but to oversee the work.  Where boards run into trouble is when the staff are unethical and they don’t property do their oversight work.

Boards that do this well figure out when staff is lying to them within a few months and they take corrective action.  My sister and I were discussing this the other day in relation to the democratic party. Why did it take the governance board 7 years to find out the finances were crap and that they were deeply in debt and that their executive director was fudging the numbers and moving things around? The boards I have been on and my sister has been on – would not have allowed that to be the status quo for more than a few months!  The oversight board of the DNC failed in their basic duties.

A board decides direction and provides oversight. Oversight is a trust but verify job. Failure to verify means dereliction of duty.  This is and will always be the biggest challenge for any board in any organization. It’s the reason I don’t accept board appointments unless I feel like I have the time to dedicate to the task.

3. What do you see as the future of Corporate Governance?

Technology makes it easy to meet and discuss and make decisions, but the basic job hasn’t changed and won’t change anytime soon. The function of corporate governance is necessary so that more than one set of eyes is watching to ensure that ethical decisions are made as to direction and expenditures.  The need for that will never go away.

What it would be nice to see is boards taking and enforcing a more humanistic approach to the business of business.  Meaning – ensuring that the business is ethical, responsible and that corporate social responsibility isn’t just a buzz word to gloss over the bad aspects of the business, but that the point of the business itself is to provide return for shareholders while also providing a good return for the community in which the business operates.   We need to eliminate the greed motive and replace it with humanistic motive. Think of this as corporate enlightened self-interest. Our business interests are forwarded and we make more money by engaging in ethical business practices that take into account our needs, our employees needs, and the needs of the communities we operate in. In other words, incorporate more than just shareholders needs into the decision-making process.

This is the point of Humanistic Management and it’s a necessity now. Short sighted decisions that harm the company and the community but enrich a small group of owners – is not good business. We need more longer-range thinking and the way to do that is to incorporate humanistic ethics into the operation of the business itself.  This has to be done at the governance level.

4. If you could speak directly to directors, investors, and/or corporate boards, what advice would you give them on this topic?

I would say several things.

First – make sure you all receive training on what exactly your responsibilities are. This is not just about making money – you are supposed to be involved in oversight functions and it’s your job to make sure the company is run in an ethical, responsible sustainable way and that the company does good as a company for everyone involved in the company – shareholders, employees, customers and community.

Second – If you aren’t already oriented or familiar with humanistic management – learn about it and start integrating humanistic management philosophy into your oversight duties. Take this seriously. You can use the business to make the world a better place and get rich at the same time. This is not an either or decision – you can do both and should be trying to do both. This is a philosophic mindset. Adopt it, integrate it and make decisions accordingly.

 Third – trust but verify. Do not allow your personal feelings for the staff to prevent you from doing your job. Make sure that the company’s directors and leadership are behaving ethically. And if they aren’t take corrective action.

Finally – stop tolerating sexual harassment and assault. Seriously – if they were embezzling funds – you would get rid of them – even if they were your best salesperson!  Stop tolerating criminal behavior because the crime seems social to you. It still affects you bottom line and more importantly – your ethical bottom line. If you want an ethical well-run company – you have to put ethics first. Period. Allowing someone to abuse your staff or customers isn’t ethical. Period.

If you want to learn more about the principles of humanistic management -

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