All Posts Tagged With: "governance"
Harvard Business Review’s Most Influential Management Ideas of the Decade
Everybody has a Top 10 list and HBR is no different. Well, they’re a little different: Their editors came up with the Top 12 most influential management ideas since 2000 (“The Decade in Management Ideas,” Julia Kirby, January 1, 2010):
1. Shareholder Value as a Strategy. And not a good one. Even the guy who popularized it concurs. “Shareholder value is a result, not a strategy,” said Jack Welch. “Your main constituencies are your employees, your customers, and your products.”
2. IT as a Utility. Cloud computing is the latest step toward buying computing capabilities as services.
3. The Customer Chorus. Technical and social developments have given customers a stronger and more pervasive voice—and companies are finding ways to listen.
4. Enterprise Risk Management. Chief risk officers hold the new umbrella over pockets of risk that had been scattered, and addressed separately, throughout the organization.
5. The Creative Organization. The ability to produce creative output was seen as a competitive advantage to encourage through collaboration and diverse perspectives.
6. Open Source. Wikipedia, which represents the power of open source, was born in 2001.
7. Going Private. According to the article, “As the decade wore on, private equity’s playbook for turning around businesses was increasingly held up as best-practice management,” especially in the areas of strategic focus and governance.
8. Behavioral Economics. Rational thought alone does not explain human decision-making. Yup, that’s the 2000’s in a nutshell.
9. High Potentials. Some managers are more equal than others and you would be smart to develop them.
10. Competing on Analytics. The data you collect…
4Jan2010 | Steve George | 1 comment | ContinuedFixing the Financial System
How does your organization review and achieve accountability for management’s actions? For fiscal accountability? For transparency in your operations? For protection of stakeholder and stockholder interests?
If every financial institution in the U.S. had been forced to answer these Baldrige questions honestly and accurately in the past few years, and if regulators had been verifying their responses, the financial crisis and the bailout it triggered could have been averted. Either they would have had processes in place to deliver ethical and effective leadership or their irresponsible practices would have been exposed.
“I think the last two years have revealed the single largest failure of senior management in the financial sector, and of the board system in American history,” wrote Bo Cutter in new deal 2.0 (November 24, 2009). Cutter has been a managing director of Warburg Pincus, a global private equity firm, and led President Obama’s Office of Management and Budget transition team. Considering the savings and loan crisis in the 1980s and 1990s and the scandals involving Enron and Worldcomm earlier this decade, one could argue that senior management and boards of directors in the financial sector have been failing miserably for thirty years. One could also make the case that the government agencies responsible for overseeing these financial institutions failed miserably, too.
This systemic failure cannot be fixed by feeding the system, as the bailout does, or by chastising the senior leaders no matter how good that feels. The system has to change. It didn’t change significantly after the savings and loan…
4Dec2009 | Steve George | 0 comments | ContinuedExcessive Executive Compensation Derails Excellence
I’m certainly no expert on executive compensation, but I believe there are two reasons that paying executives exorbitant salaries, bonuses, and stock options is bad for business. The first is ethical. The second is cultural.
An article online at the Wall Street Journal today stated that “pensions for top executives rose an average of 19% in 2008, with more than 200 executives seeing pensions increase more than 50%.” Yet, as Ellen E. Schultz and Tom McGinty write in “Pensions for Executives on Rise,” “Executive pensions rose even as the share prices at the companies declined an average of 37% in 2008 and many firms froze employee pensions and suspended retirement-plan contributions.” And cut employee benefits. And laid people off.
That’s an ethical issue. It’s a moral issue. The Economic Policy Institute stated that the average CEO of a company with at least $1 billion in annual revenue makes 262 times what the average worker makes. I’ve heard all the rationalizations for this but they miss the point: Companies pay their CEOs these outrageous amounts because they have passive investors and servile directors who rarely question the conventional wisdom of paying a leader 262 times more than other employees. Very few have the courage to break this paradigm.
In “Ripping up the rules of management” (CNNMoney), Susanna Hamner and Tom McNichol compare the conventional “wisdom” to the best practices of companies such as Whole Foods, which limits executive pay to 19 times the average full-time worker’s salary. The article quotes Whole Foods CEO John Mackey, who said, “Fewer…
4Nov2009 | Steve George | 0 comments | ContinuedNew Study of Corporate Citizenship
A new study by the Boston College Center for Corporate Citizenship found that two-thirds of company leaders believe ethical and values-based leadership in the executive office is an important factor in difficult economic times. Leaders also cited effective corporate governance practices (61%) and more effective industry self-regulatory policies and initiatives (58%) as important factors.
All three of these factors are addressed in the second half of the Leadership Category in the Baldrige Criteria. Companies that want to improve in these areas can ask and answer the questions in Item 1.2 (here) and read how Baldrige Award winners respond (award application summaries here).
The study shows that more companies are doing more than just talking about corporate citizenship. Forty percent of the respondents assign a team or individual to work on corporate citizenship issues, up from 26% in 2007. More companies are setting policies for corporate citizenship and integrating it with their business planning processes.
The study also found that more large companies are “establishing corporate citizenship management policies and practices to ensure citizenship is integrated into the core business.”
As the study concludes: “Increasingly, customers, employees, business partners, and government demand that corporations take an active role in social, environmental, and community concerns. That’s why strategic corporate citizenship is more than good business—it’s a business essential.”
You can read a summary of the survey here.
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