It’s “Prime” time for corporate governance

Jeff Bezos, founder and CEO of Amazon, has amassed an online empire that’s valued in the neighborhood of $247.6 billion. Despite his billions, Bezos doesn’t have all of the answers. Recently, for example, his “friendly and intense, but if push comes to shove we’ll settle for intense,” attitude earned him some negative press.

The news coverage validates the growing internal struggle for businesses over the last few years: corporate governance. As the generational gap widens, so too does the struggle with effective leadership. So I think it’s “prime” (bad pun intended) time that corporate governance is re-examined. Let’s start with the basics.

At the core of successful corporate governance is effective leadership. As management consultant Peter Drucker pointed out, “Management is doing things right; leadership is doing the right things.” Being a leader includes strategy and vision. Business leaders aren’t necessarily born, they’re groomed through a company’s corporate governance policy.

Consider Henry Ford III. Henry started his automotive career as a car salesman at the largest Ford dealership in the country. He learned the company from the ground up. Today, after many years of working in 9-to-5 jobs, he’s the vice president of marketing for the Ford Performance Division. Earlier this year he launched the 2015 Ford Shelby GT350, which was recently named Yahoo! Autos “Epic Ride of the Year.”

Henry has successfully made the shift from working IN the family business, to working ON the family business. He’s moved from operations to being a part of the vision and long-term strategy of Ford’s performance program. But this level of growth can only happen (and be consistently maintained) within a corporate governance program that fosters leadership.

Fortunately, there are some fundamental responsibilities that can be outlined in a corporate governance policy that you can use as a starting point. These “Duty of Care” concepts may include:

1. Acting honestly
2. Paying attention and acting diligently and reasonably
3. Using common sense, practical wisdom and informed judgment
4. Recognizing a director’s role will vary depending on various activities
5. Recognizing the nature of the oversight will vary
6. Establishing an objective standard of conduct
7. Emphasizing allegiance to the corporation

Notice these concepts emphasize a higher level of leadership that goes beyond managerial capacity.

Creating a strong corporate governance policy is critical for every size family business to maximize its potential. It should include a policy structure that allows each individual to be constrained only by the limitations they set for themselves.

In the coming weeks, I’ll continue to outline how corporate governance can effectively resolve conflict, promote board discussion and maintain cohesion inside the business.

To learn more about how REGENERATION can help you with corporate governance visit our website

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