Tag Archives: Corporate Governance

Delegation Will Set You Free

January 27, 2015 By in Management Tags: , ,

Centralised control has failed in every single economic endeavor known to man. As a national economic system centralised control, better known as communism, failed spectacularly in the USSR. More recently China’s attempt to incorporate capitalist elements to its centralised economic control framework lead to the country wasting USD 6.8 trillion in investment according to a recent report by the Financial Times.

Such failure tends to be true at the company level as well. Centralised management, or non-delegation, restricts the potential for a company. The CEO is a single person and if he retains complete control and refuses to delegate then he will limit the potential of the company to his personal ability to manage all of it. On the other hand, a more distributed control structure allows the company to scale its business by scaling its human resources.

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Entrepreneurs Face Trust Challenges in the Middle East

December 17, 2014 By in Entrepreneurship Tags: , , , ,

Trust in the Middle East is based on social networks: how much I trust you depends on how often I have interacted with you and whether people I trust also trust you. Essentially, trust is a commodity that is built up over time. This model is found globally but there exist alternatives and substitute models that are applied when appropriate. One such model is the swift trust model that Americans often use when faced with situations where trust is needed but there is no time to build it up using a conventional model. This is a trust first, verify later model. A simple example is disaster relief groups which are composed from various sources who need to act immediately. This model is precisely why Americans seem to be able to repeatedly launch successful start ups, whilst in the Middle East many start ups seem stuck.

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Conducting an Effective Board Meeting

December 2, 2014 By in Corporate Governance Tags: ,

In espousing deployment of corporate governance frameworks it is not enough to discuss principles only, details of how to effectively operationalise these principles are just as important. One of the crucial operational aspects of corporate governance is managing board meetings. Board meetings are the focal point for dissemination of performance information, discussion of major issues and strategic decision making. Since there are usually only four to six board meetings per year it is critical that these meetings are conducted effectively as there is little room to make up for delays. Continue reading →

Shareholder Activism Requires Shareholder Networking

November 26, 2014 By in Corporate Governance Tags: , ,

Shareholder activism has acquired a bad name being associated more with corporate raiding than it is with concepts of introducing corporate governance by the shareholders. This is a shame as shareholder activism is the best way to ensure effective corporate governance of a company. The current model gives shareholders the semblance of control at annual general meetings when they get to ask questions about the financials and vote in directors of the board. The reason that this is not real control is that any disparate body of people that does not communicate and internally discuss matters in advance of a group decision will invariably make a bad decision.

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The Role of Meritocracy in Corporate and National Success

November 25, 2014 By in HR Tags: ,

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Meritocracy in the corporate world can be defined as hiring and promoting employees into positions based solely on their competence without any favouritism such as to relatives, known as nepotism, or to benefactors, known as cronyism. Meritocracy is such a strongly held concept in terms of the successful execution of any endeavour that nations have embraced it as a central tenet of their civil service where employment and placement are based on rigorous competitive exams. Singapore, arguably the poster child for successful emerging nations, has meritocracy as a basic national guiding principle. If nations are paying attention to meritocracy, should not businesses do the same?

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Disinformation in the Investment World

November 19, 2014 By in Due Diligence Tags: , , ,

The main documents pertaining to the state of a business are either legally notarised, such as the memorandum and articles of association, or are heavily regulated, such as the audited financial statements and analyst reports. This information, however, is not enough to understand the business and quite often colour needs to be added in the form of written and verbal commentary from management. Regulation of this commentary is either light or easily circumvented allowing management to present a picture that is at best optimistic and at worst fraudulently manipulative. I had the unfortunate experience of being exposed to several such companies. Continue reading →

Leaders are the Drivers of Corporate Change

November 18, 2014 By in Leadership Tags: , ,

The Change Management industry is doomed. Change means uncertainty. Uncertainty means risk. Risk means danger. Humans are genetically coded to avoid danger. Therefore they will always resist corporate change.

Change management consultants (‘CMCs’) will advise that winning employee buy in is critical. But how do you do that? How do you convince employees that an unknown future is better than a known present? Maybe if the present is really bad, but by then things are usually too late. Continue reading →

Family Business: Acknowledging Core Challenges

November 9, 2014 By in Family Business Tags: , ,

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Family businesses have been the private sector economic foundation of the GCC. Their financial strength and contribution to national GDP is obvious. Their challenges, however, are usually private, hidden behind a family wall of silence. True, there have been a few public blow ups, but everything else is discreet. This is a shame, as these wonderfully successful family businesses deserve to remain successful across generations and a necessary part of that is open debate and discussion on the challenges faced by these families. How else can you learn?

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The Principal–Agent Problem in Risk-Taking

November 4, 2014 By in Risk Tags: ,

The single greatest driver of business success is not a unique idea, innovation, marketing, networking, leading or managing. It is the willingness and ability to take calculated risks. There are many different definitions for risk but a useful one is: risk is the presence of an unknown negative outcome. Another point to make clear is that the key success factors are taking and managing risk, as opposed to simply the existence of risk. An example of this crucial point is the decision to introduce a new product is taking risk, whereas a new competitor entering the market is just the introduction of risk. Continue reading →

My Zawya Story: The Importance of Independent Board Members

November 3, 2014 By in Corporate Governance Tags: ,

This post is part of the My Zawya Story series.

I have written extensively about corporate governance (both on the board and on management) and will not repeat myself here. What might be useful is to talk a little bit about the human dimension and my Zawya experience provides a perfect opportunity. In the initial years the Zawya board was a mix of the Zawya founders and Saffar executives and appointees. As the company grew and matured two new directors joined: Steffen Schubert and Anthony (Tony) Mallis. They added tremendous value to the Zawya board and to the company itself. Continue reading →