Leadership and Governance in Corporate Organizations

This report discusses the interconnection between leadership and governance in corporate organizations. It highlights the role of Corporate Governance in the organization and also a deep analysis of how the CEO are majorly contributing into the Corporate Governance and how their activities are influencing the overall structure of the organization. The report also includes the perspectives of leadership by explaining how CEOs can lead the organization in an effective way.

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Leadership and Governance
Student’s Details-
8/28/2019

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Executive Summary
Leadership plays a vital role in the organization and corporate governance as well as the people
who will develop the standards for others should have effective leadership skills. Therefore,
leadership and governance are mutually dependent. The main aim of the report is to highlight the
role of Corporate Governance in the organization and also a deep analysis of how the CEO are
majorly contributing into the Corporate Governance and how their activities are influencing the
overall structure of the organization. The analysis is undertaken from secondary research through
academic books, journal articles and the website sources. The report has included the
perspectives of leadership by explaining how CEOs can lead the organization in an effective
way.

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Contents
Introduction......................................................................................................................................3
Responsibilities of Board of Governors to monitor CEOs..............................................................3
Interconnection between Leadership Style and Governance Models..........................................3
Performance Monitoring and Evaluation of Corporate Direction...............................................4
Organizational Compliance and Risk Management.....................................................................4
Lead by Example.............................................................................................................................5
Importance of ethics, diversity and politics for effective leadership...........................................6
Perspectives of different stakeholders in Corporate Governance................................................6
Leveraging the Loyalty of the employees.......................................................................................7
Managing Networked Organizations...........................................................................................8
Recent Article..............................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
Corporate Governance lays down the ways, processes and techniques in which corporate is
managed. It ensures that the business is carried out by keeping in mind the needs of the
stakeholders. Corporate Governance is undertaken by Board of Directors fulfilling the needs of
an individual and society (Jan & Sangmi, 2016). Good corporate governance entails the behavior
and responsibility of top level managers which describes their attitude towards the society. In
Corporate Governance, a CEO plays a vital as CEO is accountable for the behavior and actions
of the company. CEO are hold responsible for the overall management of the company and that
can only be possible when they have effective leadership capabilities for leading an organization.
However, leading an organization is a challenging part for a CEO and it is expected that he/she
should have all the attributes of a leader. The purpose of the report is to highlight the role of
CEO in Corporate Governance. Also, the importance of effective leadership in a CEO leading a
company and being accountable for the maintaining the values and beliefs of the company are
also discussed.
Responsibilities of Board of Governors to monitor CEOs
Board of Governors is the highest decision making body into the organization and is often
regarded as Corporate Governance which relates to distributing the rights and responsibilities
into different participants into the organization. Board of Governor is treated as an advising
committee that is concerned advising CEO in the management decision making (Pathan, 2009).
Further, Board of Governors monitors the activities and operations of CEO by approving or
disapproving the strategic decisions of CEO under the prescribed guidelines of Corporate
Governance (Wang, 2014). Apart from using their skills and expertise to advise CEO, it also
reviews the performance of CEO and can take a decision to replace CEO if the Board finds the
performance inappropriate in the interest of the organization. Therefore, Board of Directors not
only solves the queries of the CEOs but also takes regular feedback of the management and the
success of the projects lead by CEO in order to get to a fair estimate of the performance of CEO.

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Interconnection between Leadership Style and Governance Models
Corporate Governance provides a system for controlling and operating a company. It is the
responsibility of the Board of Governor to set a strategic goal and establishing effective
leadership for putting the goal into action. Therefore, leadership style of the Board of Governors
plays a crucial role in efficient management of the organization (Du, et al., 2013). There are
different governance models and choosing of the right model by the Board is necessary for the
success of the organization.
In Corporate Governance, there is growing importance of leadership style as it defines the way
Board will govern the organization and the patterns of actions that it takes to achieve success in
the long-run. By taking manager focus as governance model, it can be said that Board of
Governors have transformational leadership style. Transformational leadership style is primarily
concerned with holding positive expectation from the followers and motivating them to achieve
the objectives of the organization. Similarly, manager focus model states that the Board of
Governor has focus on one dominant individual (Nooteboom & Termeer, 2013). It supports the
activities of CEO and has positive expectation from CEO.
Performance Monitoring and Evaluation of Corporate Direction
Board of Governors are involved in monitoring the responsibility of the board and also the
performance of the projects that are being approved by the board. This body provides strategic
direction and monitors and supports the management. Further, it can be noted that the Board
monitors the performance by examining the success of the plans and also overlooking whether
the objectives of the organization are achieved (Tuggle, et al., 2010). For monitoring, a
consistent method is used where Board receives and reviews the data and compares with the
plans, previously made strategies and financial objectives that are being set earlier.
Also, the board acts as a leadership body where it provides strategic direction to the company
and is highly responsible for monitoring the approved plans. Further, Board evaluates the key
performance indictors and ensures that the objectives of the organization are monitored and
achieved. Board has a strategic oversight on the operational plans and monitor the financial
performance of the company (Ferkins & Shilbury, 2015). It majorly monitors the financial plan
to analyze the expenses and incomes which is evaluated by audit committee.

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Organizational Compliance and Risk Management
Board of Governors have an audit committee that oversee the financial reporting, risk, ethics and
organizational compliance. The committee review the financial statement and presents the same
to the Board of Governors (Price, 2018). The audit committee also discusses the matters that
could affect the reporting of financial statements and it is responsible for establishing guidelines
for technical regulations through internal control. Audit committee plays a vital role in Corporate
Governance as it monitors and controls the guidelines led down by the Corporate Governance
and ensures that the organization has fulfilled the compliance required for the effective
management (KE & RB, 2017).
Also, auditing or internal control entails a system which ensures compliance with the relevant
laws and regulating the potential risk. The systematic and disciplined approach of audit
committee helps in managing the effectiveness of risk management (Pirson & Turnbull, 2011). It
identifies the areas of risk and formulates the improvement strategy for managing the risk
(Barlow, 2016). It ensures the reduction in the fraud risk by examining the omissions in the
financial statements. Further, audit committee fulfills the legal obligation with respect to
corruption laws by understanding the procedures and policies that could lower the corruption-
related risks.
Lead by Example
Leading by example means the CEOs make involvement with the employees by becoming role
model for them as they are constantly watched and overlooked by all the stakeholders. CEO can
lead by example by setting priorities and expecting the performance from others that can only be
possible for CEO himself (Napoletano, 2017). This will help in becoming a role model for the
employees by acting in a certain way that is expected from them. When CEO has integrity then it
shows the employees that he/she has the capability to fulfill the commitment or promises.
However, when CEO places integrity in the behavior or activities then it enables in creating
leadership examples for the employees and they consider the leader as a role model and easily
get influenced by CEO.
Further, a CEO should be leading by example through becoming vulnerable which can improve
the culture of the organization which can create a bond, respect and also openness among the

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employees (Mariama-Arthur, 2014). This is multifaceted approach which can lead to the
development of better leaders who are committed to the personal and professional goals.
Importance of ethics, diversity and politics for effective leadership
Ethics are important for every organization and it is crucial that the leader fulfills the ethical
responsibilities and act within the ethical code of conduct. Ethical leadership is concerned with
motivating and influencing others to do the right thing (Katja , et al., 2010). Ethics are important
for the effective leadership as it creates a better impression on the employees and develops
integrity and trustworthiness within the workplace. Ethics ensure that the leaders are adhering to
the rules and guidelines and also following the core values of the organization which can
enhance the employee engagement.
One of biggest challenges that a CEO faces is to embrace diversity as CEO has to ensure that all
the employees are getting a cooperative environment where all people are valued and respected
and offered similar opportunities (Gotsis & Grimani, 2016). For ensuring effective leadership,
CEO has to give equal opportunity to all the employees so that they feel engaged and also helps
in winning the trust of the employees. Diversity in all the operations of the CEO plays a vital role
in the effective leadership and how the leaders influencing and generating a workplace
environment where all people are focused towards the goal (Brescoll, 2011).
Further, for governing an organization, politics as a significant contribution. Politics is concerned
with the activities that major contributions in the influencing people through the policies (Cohen,
2018). However, it can be noted that politics can have negative influence into the business if not
exercised properly. In leadership, politics is important as well as provides an opportunity for the
CEO to distribute the resources and taking crucial decisions for the well-being of the
organization and building long-lasting relationships with the stakeholders (Friedman, 2018).
Perspectives of different stakeholders in Corporate Governance
In corporate Governance, it is important to fulfill the needs of different stakeholders such as
employees, managers, shareholders, owners and society in order to have sustainability into the
operations which can be helpful in attaining sustainable success for the organization (Susanne
Johansen & Ellerup Nielsen, 2011). The needs and interest of every stakeholder is crucial for the
business. The basic principle of Corporate Governance states that the organization must serve

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interest of the stakeholders by acting as a responsible body that manages the integrity and ethical
behavior of the organization towards the stakeholders.
Internal stakeholders include Board of Directors, shareholders and employees. Corporate
Governance lays down certain standards for shareholders as they are the primary concerns for the
company as they will lead to the earning of maximum return in future. Moreover, Board of
directors are appointed by shareholders and have major role in the organization as they undertake
the affairs of the organization. Employees are the group of individuals who work altogether to
achieve the goals of the organization and have major contribution in the performance of the
operations.
External stakeholders are the suppliers, creditors and customers. Customers are the main reason
for the existence of the organization and hence the organization carefully examines their needs
and fulfills their needs on the highest priority. The organization maintains healthy relationship
with the creditors in order to get finance that the organization can utilized for the purpose of
growth. Suppliers are the main stakeholders of the organization as they supply the inputs that are
required by the organization to undertake day-to-day activities. Apart from this, the governing
body of the organization has to take care of the communities by following the rules and
developing practices that are in the favor of the communities.
Leveraging the Loyalty of the employees
CEOs in the organization seek to leverage the loyalty of the employees in order to carry out the
leader’s vision and converting the vision into reality. However, motivation is the key factor when
leveraging the loyalty. When employees are not inspired to perform the tasks, then it creates the
possibility of inefficiency in the task performed. Therefore, CEOs should understand the
importance of motivation and should continuously influence the employees by understanding
their needs, desires and dreams. Apart from this, CEO should create involvement with the
employees which can develop high amount of loyalty. Further, if the loyalty is gained through
use of power then it can lead to anxiety and frustration within the employees. Therefore, CEO
should gain the trust of the employees through dedication and by building good relationship with
them as loyalty is earned not forced. If it is forced then it can lead to negative results rather than
giving positive outcomes.

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Managing Networked Organizations
The networked organizations are formed as a result of creation of groups or teams for the
purpose of completing an activity by utilizing the capabilities and resources of the organization.
These networked organizations are needed to be effectively managed by the leaders through
understanding that each organization within the networked organization can face specific
challenges and for overcoming the challenges leaders can training programs that can be helpful
in developing skills. For providing an effective leadership to the networked organizations, a
leader can inspire, consult and support the organizations for communicating and becoming a role
model in order to promote networked way of working.
In order to lead networked organization, it is important for the leader to develop skills and
capabilities the people who can successfully undertake communications through face-to-face and
webinars. Leaders can develop or introduce change programs when they want to introduce a new
way working through meetings, travels and decision making. Further, a leader can build norms
and values for these organizations and also enabling the team members to build their professional
and personal networks. Networked organizations should build capability of mutual relationships
and strong communication skills for having interactions on daily basis. Further, leaders persuade
the members of the team to analyze the value of each member and utilizing the capabilities of
each member in order to ensure the effective management of the networked organizations.
Recent Article
As per the recent article in business 2 community written by David Kiger titled “Employee
Loyalty is essential for CEOs” highlights importance of loyalty for the leaders (Kiger, 2017).
The article states that motivation is required for leveraging the loyalty. The leaders not only
inspire the employees but also appreciate them for their achievements in their personal and
professional life. Also, when business is new, it needs to create new bonds which can possible
when the CEO is involved in the day-to-day operations. The article elaborates that the businesses
should avoid ‘yes men’ which explains that leader should accept the encouragement and should
also be not in fear to get different perspectives. However, feared leaders will keep only like-
minded people and the people who have shared values. This can create a loss. Moreover, great
leaders accept the opinion of others and are op\en to ideas and they are ready to encourage them.

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The bottom part of the article explains that there should be no divide between the CEO and the
employees. There should be friendly environment for the employees so that they are not hesitant
to share the views which ultimately foster the loyalty. The loyal employees are more likely to
give better results and have the ability to gain their personal and professional goals. Further, the
last part of the article states that loyalty runs both ways. When employees are dedicated and loyal
towards the organization then they are more focused towards the organization. The employees
will do their best and also motivate their colleagues to bring efficiency. When CEO is loyal
towards the employees then it helps in gaining the trust of the employees that the leader is right
and has right intentions and will support them in any way.
Conclusion
Corporate Governance is the main body of the organization that governs the activities of the
management. It formulates the policies and guidelines that are needed to be followed by the
organization. In this, leadership plays a vital role as the leaders initiate the activities that will
guide the management of the organization. However, the report discusses the responsibilities of
the Board of Governors and how the corporate body monitors the activities of CEO. In that,
interconnection between leadership style and governance models is discussed along with the
patterns of organization compliance to monitor CEO. Further, the ways in which CEO can lead
by example are discussed along with giving due importance to ethics, diversity and politics in the
leadership. Lastly, the importance of loyalty is discussed along with short analysis of recent
article.

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