African sisters education collaborativeASEC/SLDI – CAMEROONleadership Development Programme

Corporate GovernanceBy

Miki Gilbert Ngwaneh(MA International Development, UoS, UK)Coordinator, Short Professional Courses

Pan African Institute for Development – West Africa (PAID-WA) BueaE-mail: gilbert.miki@paidafrica.org/miki_gilbert@yahoo.com

WHAT IS IT ALL ABOUT?

“The proper governance of companies will become as crucial to the world economy as the proper governing of countries…. strong corporate governance produces good social

progress. The two go together.” James Wolfensohn, 1999

Overview

What is it?…an ongoing, systematic process of implementing

effective change.

…A dynamic value-based process that ensures changes within a system, with emphasis on the capacity to achieve and sustain a desired state of affairs that is of benefit to the organisation concerned

…A deliberately planned organizational effort aimed at improving an organization’s effectiveness and efficiency

Corporate Governance

set of mechanisms used to manage the

relationships (and conflicting interests) among stakeholders, and to determine and control the strategic direction and performance of organizations (aligning strategic decisions with company values)

CG is …

Participation: the degree of involvement by stakeholders.

Fairness: the degree to which rules apply equally to everyone in a group or society.

Decency: the degree to which the formation and stewardship of the rules is undertaken without humiliating or harming people.

Accountability: the extent to which actors are responsible to a group or society for what they say and do.

Transparency: the degree of clarity and openness with which decisions are made.

Efficiency: the extent to which limited human and financial resources are applied without unnecessary waste, delay or corruption.

Key principles

The Rights of Shareholders; The Equitable Treatment of Shareholders; The Role of Stakeholders in Corporate

Governance; Disclosure and Transparency; and The Responsibility of the Board

Protection of shareholders’ rights and the capability of shareholders to influence behaviour of the corporation are pillars of good corporate

governance

OECD Principles of Corporate Governance

Four ideals, which should be the guiding force of organization's philosophy on Corporate Governance, are:

Transparency Accountability Disclosure Value Creation.

A strong financial and non financial disclosure regime is the heart of corporate governance

Ingredients of CG

CORPORATE GOVERANCE: WHAT IS ALL

THE FUSS ABOUT?

■ Corporate governance can destroy or create value for a firm.

■ It is concerned with:1. strengthening the effectiveness of a company’s board of directors2. verifying the transparency of a firm’s operations 3. enhancing accountability to shareholders4. incentivizing executives 5. maximizing value-creation for stakeholders and shareholders

OPENING CASE

Increase the level of trust among members;

Ensure satisfaction and commitment amongst stakeholders involved;

Confront and diagnose organizational problems and difficulties instead of neglecting them;

Ensure effectiveness in group dynamics and helps to resolve both internal and external conflicts;

Provide a level ground for collaboration and cooperation amongst the individual members.

To improve quality services rendered

Why Corporate Governance?

Why Corporate Governance?

Better access to external finance Improved company performance –

sustainability Higher firm valuation and share

performance Reduced risk of corporate crisis and

scandals

Corporate governance also matters to organisations for the following reasons: Avoidance of business scandals, which

damage trust in business. Value placed on good corporate governance

by institutional investors. Growing involvement of the private sector in

service delivery. Need for systems to prevent and deter

corruption

Why CG matters

Willingness and capacity to engage Knowledge and skills Democracy, transparency and accountability I Incentives and sanctions

Factors for effective CG

Trucker (1984) identifies four crucial components of corporate governance: Setting corporate direction Involvement in executive action Supervision of management Accountability

Components of CG

Accountability

Fairness

Transparency

Independence

Pillars of CG

Accountability

Ensure that management is accountable to the Board

Ensure that the Board is accountable to shareholders

Fairness

Protect Shareholders rights

Treat all shareholders including minorities, equitably

Provide effective redress for violations

Transparency

Ensure timely, accurate disclosure on all material matters, including the financial situation, performance,

ownership and corporate governance

Independence

Procedures and structures are in place so as to minimise, or avoid completely conflicts of interest

Independent Directors and Advisers i.e. free from the influence of others

Break up into 3 groups and let each group work on any of

the following:a. List the characteristics of good corporate governanceb. List the characteristics of bad corporate governancec. Outline measures that can be used to ensure good

corporate governance

10 minutes for preparation5 minutes for presentation

5 minutes for group-based feedback

Group exercise

Attributes of good CG

Role and Powers of management.

Legislation Management

Environment Management Skills Organisational

Induction and Training Organisational

Meetings

Organisational Resources

Code of Conduct Strategy setting Financial and

Operational Reporting Monitoring the

institutional Performance

Audit Committee Risk Management

Integrity of the Management Ability of the Board Adequacy of the Process Quality of Corporate Reporting Participation of Stakeholders

Factors of quality CG

LET’S CHECK OUT FOR THE RACI MODEL

CG and links to Roles and Responsibilities

Role & Responsibility

Charting (RACI)

Using the RACI charting system to identify, plan, manage and accomplish your roles and

responsibilities.

There were four people named:

EVERYBODY SOMEBODY ANYBODY, and NOBODY

Why do we need RACI – A Story

There was an important job to

be done and EVERYBODY was asked to do it...

EVERYBODY was sure that SOMEBODY would do it...

Why do we need RACI? Cont’d

ANYBODY could have done it,

but NOBODY did it!

SOMEBODY got angry about that, because it was EVERYBODY’s job!

Why do we need RACI? Cont’d

EVERYBODY thought that

ANYBODY could do it, but NOBODY realised that EVERYBODY wouldn’t do it!

Why do we need RACI? Cont’d

It ended up that EVERYBODY

blamed SOMEBODY when NOBODY did what ANYBODY could have done …

...sounds familiar?

Why do we need RACI? Cont’d

A systematic and participative technique to:

Identify all functions (activities, tasks, and decisions) that have to be accomplished for effective operation

Clarify roles and individual levels of participation in relation to each function

Develop best methods for individuals to fill these roles

So What is RACI Charting?

ASEC Experience with Roles and Responsibilities List the different situations where work was not

carried out because it was unclear who had to do it

List the different situations where 2 or more people were trying to carry out the same task

What are the results of working in a team with unclear roles and responsibilities

Working time: 15 mins Reporting time: 5 mins

Exercise

“My boss always overrules my decisions

whenever he/she wants” “The approval process for even the simplest item

took so long today” “It seems every department has someone putting

together a spreadsheet on the same data” “Things are always slipping through the cracks” “I have the responsibility, but not the authority,

to get the job done”

Unclear Roles and Responsibilities Result in Comments Like These...

Clear roles and responsibilities can be identified through RACI charting

Increased productivity through well defined

accountability

Increased capacity by eliminating overlaps and redundancies

Less confusion/misunderstandings by encouraging teamwork

Therefore, With Clear Roles and Responsibilities, We Should Expect to See...

Streamlined work process by eliminating

unnecessary interfaces and assigning ‘accountability’ where it belongs

Improved organization effectiveness by allowing stakeholders to cooperate and share responsibility

Therefore, With Clear Roles and Responsibilities, We Should Expect to See...

RACI - Definitions

Responsible

Accountable

Consult

Inform

These are the individuals who actually complete the

task or activity and are responsible for action and/or implementation. Responsibility is often shared, with each individual’s degree of responsibility determined by the individual with the “A”.

RESPONSIBLE: Do The Job. Execute.

R: Responsible

A: Accountable

C: Consult

I: Inform

This is the individual who carries the “yes” or “no” authority and has full veto power for an activity. It is important to clarify the levels of accountability and to distinguish between management accountability and operational accountability. Only one “A” can be assigned to a task or activity and authority must accompany accountability.

ACCOUNTABLE: Make the Decision. Take Ultimate Ownership.

R: Responsible

A: Accountable

C: Consult

I: Inform

These are the individuals who must be consulted prior to a final decision or action. “Consult” implies TWO-WAY communication.

CONSULT: Communication Before. In The Loop.

R: Responsible

A: Accountable

C: Consult

I: Inform

These are the individuals who need to be informed after a decision or action is taken because they, in turn, may take action or make a decision based on the output. “Inform” is FYI or FYA and implies only ONE-WAY communication..

INFORM: Need To Know. Do Not Change The Decision.

R: Responsible

A: Accountable

C: Consult

I: Inform

The Output RACI Matrix Can Initially Look Quite Complex

RACI’s provide lots of information in a very simple format

R CA I

R CA

I

C

CI

R A

IR CA

R CA I

RCA I

I

R

C

A

Roles of Participants

Decisions or

Activities

RACI – ASEC Project Conception and Implementation Phase

Activity Executive Director

BODCommittee

HeadsCSO

Members

Determine the aims of the project and develop the GPP R/A I C

Design the project R/A C

Approve it for implementation C R/A I

Develop the SPP I C R/A

Implement the project R/A C I

Monitor and report progress R R/A C I

Evaluate the project for results R/A I I I

RACI Charting Choose one project e.g

ASEC Leadership workshop

And provide the required RACI chart for its conception and implementation

Working time: 15 minutes Reporting time: 5minutess

Exercise

Identify work process

Determine the decisions and activities to chart

Prepare a list of roles or people involved in those tasks

Develop the RACI chart

Get feedback and buy-in (validate)

The 5-Step Process

Start with high impact areas first Don’t chart process that will soon change Work process must be well defined:

Fewer than ten activities implies the definition is too narrow

Greater then 25 activities implies definition is too broad

Step 1: Identify work process

Step 2: Determine the decisions and activities to chart

Avoid obvious, generic or ambiguous activities, such Attend Meetings

Each activity or decision should begin with a good action verb e.g.

Evaluate Schedule Write Record Determine

Operate Monitor Prepare Update Collect

Approve Conduct Develop Inspect Train

Publish Report Review Authorize Decide

Step 2: Determine the decisions and activities to chart,

cont’d

When the action verb implies a judgment or decision (e.g. evaluate, monitor, inspect, review) add a phrase to indicate the primary outcome. Examples “Monitor phone service handling of customer

requests to identify training needs” “Analyze data to locate source of delay”

Activities or decisions should be short, concise, and apply to a role or need, and in general not to a specific person

Roles can be individual roles or group roles

Roles can include people outside the organisation

Roles may be based on the “current state" of the organisation or the “future state" depending on your purpose

Step 3: Prepare List of Functional Roles

As a general rule, first assign R’s then determine

who has the A, then complete C’s and I’s

The ideal group size is four to ten people

For larger groups or more complex projects, an independent facilitator is required

Meeting time can be significantly reduced if a “straw model” list of decisions and activities is completed prior to meeting

Step 4: Develop the RACI chart

Step 4: Develop the RACI chart, cont’d

AI

A

A

A

R

R

R

RR

R C

C

C

I

I

IR RActivities, Tasks or decisions

Functional Roles

A

Chart Review - Vertical Analysis

Many R's

No empty spaces

No R's or A's

Too many A's

Qualifications

Too many "R's" could signal a work over-load situation.

Too many "R's" could signal a work over-load situation.

Functional Roles

Activities

CA IR C

IC

CR A

I CAR CA IRCA I

IR A

Chart Review - Vertical Analysis, cont’d

Lots of R's Can the functional role stay on top of so much? Can the decision / activity be broken into smaller, more manageable functions?

No Empty Spaces Does the individual(s) need to be involved in so many activities? Could ‘management by exception’ principles be used, perhaps reducing C's to I's?

No R's or A's Should this functional role be eliminated? Have processes changed to a point where resources should be re-utilized?

Too many A's Does a proper "segregation of duties” exist? Should other groups be accountable for some of these activities to ensure checks and balances and accurate decision making throughout the process? Is this a “bottleneck” in the process and is everyone waiting for decisions or direction?

Qualifications Does the type or degree of participation fit the qualifications of the functional role?

If You Find: Then Ask:

Chart Review - Horizontal Analysis

Functional Roles

Activities

CA IR C

IC

CR A

I CAR CA IRCA I

IR A

Many R's

Too many A's

Many C's

Many I's

Too many “R's" could signal "over the wall" activities: "Just get it off my desk ASAP!”

Too many “R's" could signal "over the wall" activities: "Just get it off my desk ASAP!”

Chart Review - Horizontal Analysis, cont’d

No R's Is job getting done? Some roles may be waiting to approve, be consulted, or informed. No one sees their role to take the initiative.

Too many R’s Is this a sign of “over the wall” activities? “Just get it off my desk ASAP!”

No A's Why not? There must be an 'A'. Accountability should be pushed down to the most appropriate level.

Too many A’s Is there confusion? “I thought you had it!” It also creates confusion because every person with an “A” has a different

view of how it is or should be done.

Too few A’s & R’s The process must slow down while the activity is performed on an “ad hoc” basis. Or the procedure may be outdated or it can be

streamlined if not needed.

Lots of C's Do all the functional roles really need to be consulted? Are there justifiable benefits in consulting all the functional roles?

Lots of I's Do all the functional roles need to be routinely informed or only in exceptional circumstances?

If You Find: Then Ask:

Distribute the RACI chart to everyone

represented on the chart but not present in the development meeting

Capture their changes and revise chart as appropriate

Reissue revised RACI chart

Update as necessary on a on-going basis

Step 5: Get feedback and buy-in

A follow-up meeting may be necessary if significant changes are made

A follow-up meeting may be necessary if significant changes are made

Place Accountability (A) and Responsibility (R) at the

lowest feasible level.

There can be only one accountable individual per activity

Authority must accompany accountability

Minimize the number of Consults (C) and Informs (I)

All roles and responsibilities must be documented and communicated

Discipline is needed to keep the roles and responsibilities clear.

“Drift” happens. RACI has to be revisited periodically, especially when symptoms of role confusion reappear

R A C I - Closing Guidelines

MY LEADERSHIP

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1. Has a great PURPOSE in life.

The Leader. . .

PREPARING OUR HEARTS

a. What are your burdens?

b. What are your spiritual gifts?

c. What are your natural talents?

d. What are your desires and passions?

e. What do others affirm about you?

f. What are your dreams and visions?

g. What’s most fulfilling to you?

h. What opportunities are in front of you?

Do you know your Purpose?

Character…a. Communicates CREDIBILITY.b. Harnesses RESPECT.c. Creates CONSISTENCY.d. Earns TRUST.

2. Has removed any HINDRANCE from his life.

Leaders must choose to:a. Develop personal DISCIPLINE.b. Develop a personal SECURITY & IDENTITY.c. Develop personal CONVICTIONS, VALUES and

ETHICS.

Three attitudes of total surrender:

a. We must have nothing to PROVE.

b. We must have nothing to LOSE.

c. We must have nothing to HIDE.

3. Has placed him completely at DISPOSAL

Common Traits of People of Faith:

a. Visionb. Confidence c. Hungerd. Resolve e. Dreams

4.Has a FAITH that expects results

It always starts with a need.

a. That need sparks passion within a person.b. That person acts in response to the need.c. This action moves others to cooperate.

5. Chooses to SERVE in attitude and action.

Leaders naturally arise

through this order:1. identifies a primary gift.2. develop that gift.3. match that gift with a place of service.4. provides a platform for influence.5. flourishes because of the gift.

6. Stirs up the GIFTS in themselves and others.

7. Is SECURE enough to empower others.

SECURE LEADERSa. The secure are into service deliveryb. The secure draw strength from identity.c. The secure pursue service to others.d. The secure want to add value to others.

INSECURE LEADERSa. The insecure are into

titlesb. The insecure draw

strength from imagec. The insecure pursue

statusd. The insecure want to

gain value from others

8. Has chosen to be an EXAMPLE before he leads

others.

CONCLUSION

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1. People are insecure.

Give them confidence.

2. People like to feel special.

Honor them.

3. People look for a better tomorrow

Give them hope.

4. People need to be understood.

Listen to them.

5. People lack direction.

Navigate for them.

6. People are needy.

Speak to their hearts first.

7. People get emotionally low.

Encourage them.

8. People want to succeed.

Help them win.

9. People desire relationships.

Provide community.

10.People seek models to follow.

Be an example.

Open Forum And Evaluation

Thanks

For Your Kind Attention