Corporate Governance: For the People By the People

November 7 , 2020
By Asseged G. Medhin ( Asseged G.Medhin, deputy CEO of Global Insurance Company. )

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Realising the fundamental cornerstones of corporate leadership, especially security and justice for employees, is critical. The idea that a company can thrive by the mere fact of an energetic leader is a myth. Empowered employees are just as critical, writes Asseged G. Medhin, deputy CEO of Global Insurance Company.

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Governance mainly has to do with justice and security. Any form of organisation, or even governments that cannot ensure these two essential features, lose their rights to govern and or command whatever resources under their custody.

Irrespective of the philosophy and the system adapted for governance, the people at large must feel secure from internal and external risks of dangers, and they must be confident that disputes will be resolved amicably and peacefully.

The most key assets within the frame of corporate governance are people at every level of the organisational hierarchy. This should be the mantra of any book or lecture when it comes to running businesses. On these assets, there is an immense invisible potential to be cultivated under sound corporate governance.

What else is governance, really, if not leadership by the people and for the people, to borrow former American President Abraham Lincoln’s phrase?

If the company ensures justice and security, it will have met one of its major obligations to ensure the productivity of employees. In the case of corporations, what this means is realising employee engagement, belongingness, productivity, quality assurance, value addition to customer satisfaction and image building. If employees are not convinced that this can be achieved, corporate goals, which require employee initiative and active participation at all levels, will be next to impossible to accomplish.

A company that places little value on these cornerstones of corporate governance will be open to declining productivity and creative output. This is if it does not open itself through its discouraged and dissatisfied employees to bribery, nepotism and general malice. The chasm that can be opened will have no end in sight, except of course the gradual and painful death of the business itself.

If there is no justice and security in the company, there is no fairness, no insecurity, no room for being proactive, developmental thinking or dynamism. Planned targets will be missed, income will be lost, and customers will be exposed to poor service. Bankruptcy is the inevitable end.

Of course, justice and security are just two of the major cornerstones of corporate governance to the modern company.

Any modern company needs to embrace sustainable income, learning and growth, development of capacities, and maintain healthy and sound employee relations. These are corporate governance cornerstones that should be etched on the doors of the board of directors and repeated in every meeting.

When the leaders of companies give their promise and cannot walk the talk, whatever the capital of the company, it will be a devastating cataclysm that floods the entire process. They lose creditworthiness from every dimension, which is something that cannot be saved by injecting money into the company.

If there is no transparent corporate governance understandable and acceptable by the employees and shareholders, then change agents will be fearful and barren of ideas. It creates an opportunity for mere "yes men" to shine and systematically rids the company of individuals that are productive and have the capacity to innovate.

Leaders that cannot hold onto such cornerstones fail to build institutions. They may be effective at holding onto the firm or the organisation through their sheer force of will. But they can never succeed to grow it beyond a certain point nor have it outlive them. This is, in fact, the story of most businesses in Ethiopia, which fail to outlive their charismatic and zestful founders.

The board of directors or leader should consider how they plan to build on the resources they have by realising the fundamental cornerstones of corporate leadership, especially security and justice. The idea that a company can thrive by the mere fact of an energetic leader is a myth. Empowered employees are just as critical.

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PUBLISHED ON Nov 07,2020 [ VOL 21 , NO 1071]

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