Relates to the exercise of oversight, control and authority

Remains important as a mechanism for ensuring continued growth, change and accountability for organizational resources and strategy

Formal system of oversight, accountability and control for organizational decisions and resources

Relates to a system of checks and balances that limit employees and managers opportunities to deviate from policies and codes of conduct

Relates to how well the content of workplace decisions is aligned with a firm's stated strategic direction

Involves the process of auditing and improving organizational decisions and actions

Some people believe that as long as a company is mximizing shareholder wealth and profitability, it is fulfilling it's core responsibility

Model that bases management decisions toward what is in the best interest of investors

Founded in classic economic precepts including the maximization of wealth for investors and owners

Model that sees management as having responsibility to it's stakeholders in addition to it's responsibility for economic success

Based on a collaborative and relational approach to business and it's constituents

Corporate Governance Issues

Assume legal responsibility for the firm's resources and decisions and they appoint it's too executive officers

Have the responsibility to act for the best interest of those they serve; there membership is not designed as a vehicle for personal financial gain

Best Board of directors

Worst of Boards of directors

They have allocated scarce resources to the organization, shareholders and investors expect to grow and reap rewards form their investment

Are fundamental to effective operations as they allow for comparisons between the actual performance and the planned performance and goals of the organization

Normally used to indicate responsibilities associated with insurance, liability, financial, decisions and related issues

Have an obligation to avoid ethical misconduct in the organization

Are not held responsible for negative outcomes, if they are informed and diligent in their decision making

Should guide decisions and buffer the possibility of illegal conduct

Also provides mechanisms for identifying risks and planning for recovery when mistakes or problems occur

2 major conceptualizations of corporate governance

Issues in Corporate Governance Systems (4)

Helpful in looking for effective Board of Directors (3)

Just a social responsibility objectives require more employees and executive, board of directors are also experiencing increasing accountability and disclosure mandates

Finding board members who have some expertise in the forms industry or who have serve as chief executives at similar sized organizations is good strategy for improving the boards overall quality

An effective board of directors can serve as a type of insurance against the business cycle and the natural highs and lows of the economy