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Corporate Governance: Roadmap to Corporate Excellence26 March 2011

Validictory address by

Yatish K RajawatGroup Managing Editor, Dainik Bhaskar newspaper Group

“Success in business does not require special gifts, special aptitude, or special training. Effectiveness as an executive demands doing certain—and fairly simple—things. It consists of a small number of things.”

Excellence?

Peter Drucker


Yatish RajawatGME, DB Group

Why do you need How can you lay the foundationsSpeed is not importance, sustainability is.

Governance?







Governance Excellence Reputation

Customers demand Reliability

Investors and Suppliers demand Credibility

Employees demand Trustworthiness

Communities demand Responsibility





Why Governance: the tangible outcome

Employees

Customers

Capital market

Community

News media

Better talent for lower salaries

Repeat purchases, builds market share

Higher valuation, lower cost of capital

Empathy during crises

credible publicity vs “paid” advertising

governance

excellencereputation





Think systems: a governance model for excellence

How can a group of peers or friends, act as proxy public shareholders, see to it that the business achieves what it should (normally in terms of shareholder value) and avoids unacceptable situations and actions?

Objective should be to build organization value beyond revenue and profits

How can systems and policies be put in place so that the model is future proof.

Build taxable profits, reinvestment model for the business, HR practices and financial practices.





Board for your company

The board is your alter ego it can be your mentor, your parent or friends

A CEO or owner needs to define it as it can truly give direction not just help in getting business.

The definition or choice of the people you put on board are as important as the business itself

Your company will outlive you and will sustain your identity the board is the first foundation that you lay to ensure this.

If you choose well you will grow well.





Governance must enable excellence A governance model so that your board can:

focus on the larger issues

delegate with clarity

control management's job without meddling

rigorously evaluate the accomplishment of the

organization

truly lead the organization.





Towards a workable model: Assumptions for future

The company belongs to the future shareholders, not to the CEO or his family

The board's prerogatives cannot be assumed or even defined by any subcomponent of the board, including the chairman.

The board's job is fulfilled only if it properly defines expectations and demands achievement.





Worried about today

To begin with, the way you do business now will define the future trajectory of your growth

Scrutiny and disclosures will only increase over time, not decrease

Practices you encourage, people you attract now will determine where they will take you

You cannot wash or rub away the past by deciding in the future that you want to build a different kind of an organization

Future happens now





ENDS. MEANS. LIMITS advantages

The board as a body tells the CEO what to achieve (ends) and what to avoid (unacceptable means)

Evaluation, with such carefully stated expectations, is nothing more than seeking an answer to the question, "Have our expectations been met?“

No confusion about who is responsible to the board or for what board expectations they are responsible.

Short of imprudent and unethical practices, what an organization does (the choice of the CEO—the Means) is allowed to be whatever will best serve what it is for (the choice of the board—the Ends).





Key takewaysGovernance should be seen as the enabler to sustainable excellence and reputation.

Reputation has a tangible impact on the bottomline

Governance must be owner-down not management-up.

The ENDS. MEANS. LIMITS model ensures accountability, transparency, and objectivity, and lays out in clear terms the board-management equation.

Preparing a governance roadmap is more a question of attitude not size or situation.

Thank you. Questions?Yatish K Rajawat

[email protected]

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