Corporate Governance and Leadership: A Comprehensive Analysis

This report provides a comprehensive analysis of corporate governance and leadership within organizations. It explores the core principles of corporate governance, including accountability, transparency, fairness, and independence, and their importance in balancing stakeholder interests such as customers, shareholders, suppliers, management, and the government. The report delves into the role of leadership in establishing vision and goals, fostering trust, and coordinating various interests. It further examines the governance of media and the political sphere, emphasizing the need for proper oversight to mitigate risks and ensure smooth business operations. The report discusses adapting governance principles to other spheres, the extent to which contracts should include social incentives like employee satisfaction, the reflection of stakeholders' interests in long-term incentives, and the potential impact of social incentives on CEOs' focus. It highlights the importance of long-term employee involvement, comparing it to alternative incentives regarding costs and benefits, and concludes by addressing which decisions should be efficiently delegated or taken by the board.

Running head- Corporate Governance and Leadership
Corporate Governance and Leadership

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Corporate Governance and Leadership
Corporate Governance and Leadership
Introduction
Every organization needs to function smoothly in the business environment to maximize its
wealth. The primary objective of any organization is to maximize its wealth and profit. To
accomplish this objective, the business needs be to govern and control. The top management is
responsible for ensuring smooth functioning of the organization. To ensure smooth functioning
of the organization and prevent from any misconduct the concept of corporate governance came
into existence. Corporate governance means a set of processes, practices, and rules that guide
and control the organizations. Corporate governance mainly focuses on balancing and
maintaining of interest of stakeholders such as customers, shareholders, suppliers, management,
community, and government. Corporate governance tries to build relationships with stakeholders
to determine the performance and direction of the organizations. Corporate governance is based
on four pillars i.e.
i) Accountability
ii) Transparency
iii) Fairness
iv) Independence
Principles of corporate governance
 Sustainable development of stakeholders
 Effective distribution and management of wealth
 Discharge of responsibility of society

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 Apply best management practices
 Ensure ethical standard
 Fulfillment of law of the in every aspect
Leadership is the act of or the ability to lead a group of people or the organizations. Leaders lead
the group of people from the front. They organize the people and build trust among them. The
ability to build or develop a clear vision that motivates and induces the members of a group to
achieve the common goal is called leadership. A leader of a group or team influences the
members of the group or team by his activities, and the members of the team follow their leader
with a passion. Leadership involves,
 Establishment of a clear vision and goals
 Share that vision with the group members so that members of the group can follow that
willingly.
 Provides the knowledge, information and the methods of realizing the vision
 Coordinates with the conflicting interests of different stakeholders and team members.
1. Could governance of the media and the political sphere be an issue to approach?
Answer- media is revolutionizing the way of communication and interaction of the people.
Media, whether print or electronic has reached all over the world especially electronic media, has
changed the scenario of the communication. There is a golden opportunity to the businesses to
harness the benefits of media to grow and develop and to increase its wealth by increasing
revenue by targeting the new channels. Organizations are running towards leveraging the

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benefits of social media and integrating internal and external social media to establish proper
communication among all the stakeholders. Media is beneficial for the business, but there are
also some limitations of it. Media can make a business famous within a shorter period, and it also
can defame the business within a day. Therefore, business needs to understand or decide for what
purpose it should media. Hence proper governance of media is essential for the business.
One of the external factors that influence the business most is a political factor. Political factor
includes the rules and laws formulated by the government to regulate the business. The
organization needs to follow that rules and regulations formulated by the government to avoid
any legal action by the government and to smoothly function in the business environment. If the
business will not follow the rules and regulation of the government the business might be closed,
or it might face legal action taken by the government. Therefore, the organization needs to
govern political sphere to avoid any risk or legal action by the government.
So, governance of media and political sphere would pave the way for the growth and
development of the organization.
2. To what extent could/should sound governance (dealing with conflicts of interest, etc.)
principles be adapted to other (political, etc.) spheres?
Answer- every organization faces some conflict either between team members, between
management and shareholders, between employees and management or between two groups. The
conflict may arise in even between two organizations. Conflicts of any kind may lead to decrease
in productivity, and the performance of overall organization may affect. Conflict raise tension
among all the stakeholders and out of all some may go for a strike or any other kinds of activities

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that harm the organization growth and development. Therefore, conflict within the organization
needs to be controlled. To control conflict, there should be sound corporate governance. If the
corporate governance is sound enough to control the conflicts either within the organization or
outside the organization it should be adapted to another sphere to governance that sphere
effectively. If the principle of governance is good enough to handle the conflict, it must be
adapted to the full extent to control the other sphere.
3. To what extent should contracts explicitly include social/societal incentives (employee
satisfaction, etc.)?
Answer- Employees work in the organizations to get paid compensation to fulfill their needs and
wants. Compensation of employees keeps them motivated to work towards the common goal of
the organizations. The compensation of employees should be according to their work or labor. If
the compensation is not meeting their work level, they will be demotivated, and hence their
productivity may fall. One other factor that influences the level of motivation of employees is
equality of compensation. It means there should be equal pay for equal work. The amount of
compensation is also determined by the position of employees. If an employee is at the higher
position, he will get more compensation than the employee at a lower position. It is because of
the responsibility and accountability of the positions. The higher position holds more
responsibility and accountability than the lower one. There is a myth that management does not
work but only see the functioning of the organization from the top. This myth creates the
problem of doubt among the lower level employees. They think that the fruit of their work is
eaten by the management. But this is not the case, and the reality is something else. The top
management is more responsible and accountable and does a lot of work to manage the

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organization and put the organization on the path of development. But organization should also
take care of the needs and wants of its employees. They must be paid according to their work and
responsibility and also for the meeting of their needs and wants to make them satisfied and
motivated.
4. To what extent are stakeholders’ interests already reflected in the long-term incentives of
your organization (share value, etc.)?
Answer- Stakeholders are those who have interest in the organization or all the interested party
for an organization is stakeholders of the organization. Stakeholders of an organization are
customers, suppliers, investors, shareholders, employees, management, and the government.
Stakeholders are keen for the long-term growth and development of the organization. As far as
the organization will grow in the future or the long-term, the stakeholders would be benefited.
Stakeholders are also responsible for the growth and development of the organization in long-
term. They show their interest in the growth of the organization at large extent. In the long-term
incentives of the organization, the stakeholders show their deep interest.
5. To what extent would including social/societal incentives undermine the focus of CEOs?
Answer- Employees would be motivated at the workplace if they get acceptance and recognition.
Acceptance and recognition are social incentives. For many employees, social incentives are
more important than moral incentives. If an employee is doing outstanding performance and
achieves a milestone, he must be rewarded according to his performance. If he is not getting
rewards according to his performance, the morale and the level of motivation of that employee
will decrease, and next time he will not be able to perform up to the mark. For this kind of

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employees, the social incentive is necessary to keep them motivated and ensure higher
performance. They need recognition at workplace and acceptance by the management and other
colleagues. The organization should ensure a system of social incentives to keep its valuable
employees motivated. The employees whose performance is outstanding should be compensated
by interpersonal rewards such as recognition, inclusion, and acceptance to undermine the focus
of CEOs.
6. Long-term involvement with the company is key at John Deere’s.
Answer- at John Deere integrity is considered as most effective fuel for sustainable performance
of the company in long-term. The company focuses on the long-term involvement of its
employees with the company. Long-term involvement with the company is beneficial for both
the employees and the company. The company would perform smoothly if the same employees
are working for the company for years and there will be no cost of new hiring. Long-term
involvement also creates mutual understanding among employees and between employees and
management. The experience of employees will make them more efficient and effective to
accomplish the goals and objectives of the company. Long-term involvement also makes
management and employees transparent, and everything is shared by the management with the
employees. Long-term involvement also creates value for both employees and management.
There are “n” numbers of benefits of long-term involvement, and hence the company John Deere
considers Long-term involvement is key to the company.
7. How do long-term relationships compare to possible substitutes (compensation, etc.) for
giving the incentives to think "long run" in organizations regarding costs and benefits?

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Answer- as we all know that if an employee is associated with a company for a long time, he will
be getting paid a handsome amount of salary. Some compensation increases with the increase in
time with a company. The company pays more to the employees who are associated with the
company for years. Generally the employees who are associated with the company for years are
considered as valuable employees and company tries to retain them at any cost because they
know the rules and regulation of the company, they know the culture of the company, and they
are well suited to that culture, they are well aware of the business of the company, and most
importantly they are working towards one common goal of the company. Long-term
involvement of the employees also saves the extra cost of the company. These costs are,
 Recruitment and Selection cost: if the rates of turnover of the employees are high the
company will hire new employees on the regular basis. The hiring of employees involves
huge cost. It includes the cost of advertisement, the cost of recruitment, the cost of selection,
the cost of time, and the cost of conducting induction program for the new hire.
 Training and Developmental cost: after incurring the cost of recruitment and selection the
cost of training and development of new hires need to be incurred. Although the existing
employees also need training the training of new hires is important to make them skillful to
work effectively and efficiently.
 Low productivity: new hires do not aware of the rules and regulation, and they also need to
acquire new skills and competencies to be more productive. Acquiring new skills and
competencies take time and therefore the productivity of new hires is low. The performance
of the new hires would not be up to the mark, and it would influence the overall growth of
the company.

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Therefore, it is better to have an employee who is working for the company for years. Although
his compensation or incentive would be high, the productivity of that employee would be higher
than the compensation and incentives.
8. Which decisions should be efficiently delegated or taken by the Board?
Answer- all the decisions that may influence the overall organization is taken by the board.
Every organization follows some hierarchy and the decisions at the different levels of the
organization are taken by the head of the department. The impact of these decisions is limited to
the only that department in which decision has taken. But when the decision is taken by the
board influence the whole organization. At the board level, long-term strategies are formulated
and implemented. The top-level management or the board is responsible for ensuring smooth
function of the organization. The decisions regarding the expansion of business, launching new
products, building new outlets, going overseas are taken by the top level management. The top-
level management is also responsible for maintaining transparency in the organization. The thing
that should be taken into consideration is whether the board is capable of managing and handling
all the issues of organization level. The board needs to take every decision efficiently either
related to the expansion of the business, launching the new product, the opening of new outlets,
going overseas, adopting new technology, acquiring new business, or adopting a new process of
production. These are the decisions that affect the whole organization. If these decisions fail the
organization will suffer from huge loss, and it may be out of business, or the rate of growth will
slow down, and competitors will capture the potential market. Therefore, all the decisions should
be efficiently taken by the board.

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9. Is the efficient delegation the same regarding crisis (What are the respective roles of the
CEOs and the Board in times of crisis)?
Answer- Delegation means distributing responsibility with authority to the subordinates or the
lower level management. Normally management does not delegate responsibility because of the
fear of loss of power. But when the situation requires delegation of responsibility or the
management thinks that it has more burden of responsibility delegate some responsibility to the
subordinates or the lower level management. Therefore, it can be said that delegation is same
regarding the crisis.
Roles of CEOs in times of crisis
In times of crisis, the roles and responsibilities of CEOs are more crucial. They need to manage a
whole organization in times of crisis. The crisis may be of any kind and CEOs need to handle
that accordingly.
 The CEOs should lead from the front in times of crisis. In times of crisis, all things need to
be organized; all the employees need to work in a single direction. The objective of everyone
should be same, and all should coordinate to accomplish the objective. It can be possible only
when the CEO will lead the organization from the front.
 The CEO should try to find out the core reason for the crisis and sort out that reason. CEO
should call all the employees and guide them in a direction to sort out the core reason for the
crisis.
 The CEOs should take appropriate decision to handle the crisis.

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 The CEOs should also support the operation and administration to handle the crisis. He
should provide the resources effectively.
The roles of board in times of crisis
 The board needs to be proactive rather than reactive.
 In a time of crisis the board should immediately form a crisis committee to analyze the cause
of the crisis and what will be the consequences of the crisis, and how can the consequences
be minimized, and possible measures to sort out the crisis.
 The board needs to monitor the possible risk at the time of crisis.
 The board itself should take care of the crisis and manage all the resources of the
organization.
10. To what extent are the same competencies expected from CEOs in times of stability and in
times of crisis?
Answer- stability and the crisis are the two sides of one coin. The business environment is
uncertain, and it fluctuates very quickly. The business strategies in these situations are different.
The crisis is the exact opposite of stability in the business world. Therefore, the strategy to
handle business in times of stability would be different than in times of crisis. It is more or less
easy to manage a business in times of stability, but in times of crisis, the CEO should be more
capable of managing the business. It is very tough to manage efficiently and effectively business
in times of crisis. Most of the CEOs can manage both the situation efficiently, but many CEOs
have failed in times of crisis. So that up to certain extent we can expect same competencies from
CEOs in times of stability and in times of crisis.

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11. To what extent has your CEO/organization endorsed or set up a crisis response process and
social media plans? What concrete benefits, regarding your stakeholder ecosystem, do/would
these bring your company?
Answer- as per the case study of BP oil the CEO Hayward efficiently manages the crisis. The
organization at large extent endorses the crisis. The CEO Hayward just after oil spill reached to
the accident site immediately and took the responsibility of the crisis. He showed empathy with
the victims and answered the questions of media on behalf of BP. But the media printed many
articles till six months blaming Mr. Hyward. Although, he was visible and transparent with the
media.
The concrete benefits are,
 The selection process of CEO has revised
 Crisis communication plan was set
 Social media manager was hired
12. When does the pressure of accountability induce leaders to unethical/unlawful behavior?
Answer- normally leaders are considered to be fair and ethical. They cannot do anything that is
unlawful. They lead the group of people, and people trust in him because of his behavior and
commitment toward the ethical norms. But sometimes leaders do the unethical or unlawful
activity. The reasons to be involved in unethical or unlawful behavior could be,
i) Due to the excessive pressure of reaching unrealistic performance targets.
ii) Due to the shorter period of achieving large targets
iii) Due to failing in achieving targets regularly

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iv) The will to acquire more power to control the people may induce them to behave
unethically or unlawfully.
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