Vol. 3 :: No. 10 October, 2001 (Ashoj-Kartik)

Management

Good Corporate Governance

Corporate governance has become a topical issue at the moment. The reason behind this concept gaining increasing importance in the corporate world is that most of the organizations, especially in third world context like ours, are rife with mismanagement, lack of corporate ethics and professionalism. The lack of corporate governance has become the root cause for the failure of most of the organizations and hence, it is high time that all the organizations aspiring for success and survival practice good corporate governance and accord top priority to this.

Corporate governance primarily refers to the way, approach and attitude to managing an organization. Good corporate governance refers to practicing true professionalism in governing and managing an organization. The governing body of the organization should have high integrity and business ethics while running the organization. This aside, the knowledge, competence and quality of the people at the helm of the organization matter most to ensure good corporate governance. They should be able and visionary leaders to steer the organization to the path of success.

However, the situation prevailing in Nepalese context in this regard is not satisfactory at all. Firstly, people at the helm are either unaware of the importance of good corporate governance or are reluctant to implement this concept due to old and ossified mindset.

The major stumbling block for good corporate governance in Nepalese context is the lack of meritocracy corporate culture. Here, position, power and relationship matter more than quality and skills of the people. People’s contribution in the organization is not evaluated objectively. The top management prefers personal favor and undue respect from their employees rather than performance. Corporate power and politics that favor and value more to the mediocre and subservient people is very much prevalent in most of the Nepalese organizations. And, this is here to stay as most of the people who have managed to climb the ladder by applying such means do not and cannot bring about positive charges. This apparently prevents practicing good corporate governance.

The value of the Human capital in such organizations is not recognized at all. This is indeed a strategic flaw and major bottleneck to implement the very notion of good corporate governance. As an organization is made up mostly of employees one cannot and should not undermine and underestimate their power and importance. And at the same time when human knowledge and intelligence has become critical and key to the success of any organizations kind of organization, this is indeed a sad phenomenon that most of the Nepalese organizations have not changed their mind-set in viewing their human capital. Still, employees are treated as slaves, not as asset. This very approach of people management dimension has to the greater extent come in the way of good corporate governance in Nepal. This self-deprecating mentality and attitude needs immediate change.

One should not hesitate to point out that the feudal culture and behavior prevalent in our society has made a way to corporate world too. Most of the people reining Nepalese business organizations come from feudal family background. Until and unless they change their behavior and attitude or are replaced by young people who have well understood the changed context of the modern corporate worlds the question of good corporate governance in our country will always remain a pipe dream.

Take the example of government-owned organizations where self-centered politicians who are more concerned for their personal interests handpick the top management people. Those so-called professionals in such organizations care more about themselves and their political masters than the interest of their organization. One cannot imagine the presence and practice of corporate governance here. Most of these organizations managed by such people are marred by inefficiency, red-tapism, and corruption. Every ordinary and honest Nepali has felt and realized this very strongly. And, the private organizations too are not totally an exception to this. Most of the Nepalese organizations running in private sector should go a long way in this respect.

While the lack of good corporate governance in Nepal is a known phenomenon, there are of late certain efforts being made in this direction. Nepal Rastra Bank, the central bank of the country has recently issued a directive related to Good Corporate Governance to Commercial Banks. The directive has spelt out the details of dos and dont’s to ensure good corporate governance in the banking sector. While this is certainly a welcome and timely step taken by this government body, this is not enough. What is more important is that NRB itself should first epitomize this before it asks others to do the same. And, equally important thing is to have an effective and strong monitoring system to ensure effective implementation of the directives.

In sum, the modern corporate world is increasingly witnessing high level of uncertainty and complexities due to the fast place of charges in every sphere of our life. People’s expectation and demand has risen significantly from these organizations – be they public or private organizations. Public organizations being a part of the government must ensure transparency and efficienty in its service delivery while private organizations should even be faster in understanding and servicing their customers. Hoevfer, to ensure good corporate governance, the governing body of these organizations need true sense of professionalism, high level of competence and business integrity/ethics. And, for this, a strong and effective monitoring system must be in place. One of the elements of this system can be 360-degree performance evaluation of the governing body of the organizations. Any violation of the corporate ethics or any mediocrity on their part should be sufficient ground for their replacement. Only can this approach/system ensure good corporate governance that serves the long-term interest of the stakeholders of the organizations.

Shrestha is the Asst. Manager Credit in Everest Bank Ltd.

Management Tips

Motivation : A Real Challenge

Motivation is a psychological process in human behaviour. Along with perception, personality, and learning, it is a very important process in understanding behaviour. Nevertheless, it must be remembered that motivation should not be thought of as the only explanation of behaviour.

One of the most important concerns of a manager is to motivate people to make their optimum contribution to the achievement of organizational goals. It, therefore, becomes important for him to understand what motivates people to behave as they do. Since the needs of the employees and the organization are not always the same, the manager can better integrate these two sets of needs by gaining an insight into the needs of his employees and then channelise them in the direction of organizational needs.

Let’s go back to the late 1970s. An article "Mastering Management in Creative Industries" was published in Business Week "…According to managers in the creative industries, motivating their employees is a more difficult task than in other types of industries. They argue that when you are in an industry where artistic ability and not an established formula for success reigns, then greater attention must be given to motivate the artists to give their ability and opinions. For example, in the movie industry, a class A movie such as The Godfather cost over $6.8million dollars to produce. The Great Gatsby had an initial cost of over $8 million dollars. The returns on each film were not proportional to their production cost. The Godfather netted $129 million dollars and The Great Gatsby only $24 million dollars. …. This makes motivating people in the creative industries a real challenge…"

What incentives support excellent performance? Here are a few:

ª Clear, worthwhile, challenging goals. The need for clarity is self-evident. While "worthwhile" and "challenging" support each other, they aren’t the same. Performers can find work worthwhile and still be bored by it, or be challenged by work. The more that goals embody all three of these attributes, the greater the chance that the performer will be motivated to accomplish them.

ª Practical standards and useful feedback. Most people are far more likely to work at meeting goals when they are confident they know just what they need to accomplish and how well they are doing along the way.

ª Sufficient autonomy and appropriate support. If you want performers to commit themselves to goals, you must give them the freedom they need. But performers also need assurance that they will not be left on their own if they run into trouble.

ª Recognition. Performance improves when it is recognized – as long as the recognition fits in with the employee’s perception of his performance. Unfortunately, most formal "recognition" programmes don’t fulfill this function well.

ª Time. Performers value flexible work schedules, especially to balance the demands of work and family.

ª Money. Getting higher performance through pay alone is expensive – and it often doesn’t work. But pay does matter. Most performers have a good sense of the proper balance between the effort they expend and the money they earn. They simply will not put in more effort than they believe their pay deserves. Money acts as a powerful motivator not only because of its ability to satisfy physiological need, but also because of its ability to satisfy higher level needs such as need for status, power, recognition, achievement, etc. Money is often considered to be a measure of success.

Creating a successful reward system in an organisation is one of the major tasks, which can motivate the employees.

Ø Make it simple and direct. Employees should see a direct connection between what they do and how they rewarded.

Ø Maintain a balance between rewarding current performance and improvements. People who do well today-but aren’t improving-won’t help your organization move forward. Anyone who’s not continually improving will eventually become a liability.

Ø Separate compensation and performance reviews. They serve two different-and often opposing-purposes. You need to be able to critique employees’ performance without the worry that their pay will suffer.

Ø Keep measurements, improvements and setbacks visible. Use scoreboards, bulletin boards, voice mail, e-mail and printed announcements to inform employees on their progress toward goals.

All your staff have desires, wants, wishes, aims, goals, needs, drives, motives, and incentives and they want to be motivated in order to get their desires fulfilled. At work, they should be encouraged individually and in-group as well. Here are some tips:

Publicize group goals. Prepare a simple mission statement for your staff. Outline common goals and explain why they are important.

P Define roles. Avoid unnecessary rivalries by clearly identifying role within the group.

P Use liberal doses of we and our. Give people a sense of ownership in what they redoing as a group.

P Share information. And don’t share with only your key people, thinking they’ll pass the information down the line. Talk directly to the troops.

P Reinforce the team concept. When your staff has done well, praise the entire effort without singling out individuals.

Your strength is your mastery in motivating your employees. Involve yourself in various activities directly concerned with them. Try these:

z Painstakingly review the performance of the employees every year.

z Hand out bonuses for good work.

z Constantly write notes to managers and employees, suggesting changes, thanking them, and making note of family crises.

z Ask them to compete for NO. 1, and forget about excuses for not meeting targets.

z When they do meet goals, shower them with gratitude – and money. Losers, however, should get fired.

z Provide a continuous supply of suggestions.

l Self-starters like to operate on their own. They don’t want bosses looking over their shoulder or red tape dictating what they can and can’t do.

l If you manage some of these self-styled employees, here’s how to motivate them:

l Push them to attain goals that they see as a stretch. Issue fun challenges for them to test their spirit and deliver exceptional results. Example: Encourage them to break a company record for most annual sales by and individual.

l Let them pick their own incentives. Negotiate the specifics on what they’ll receive in exchange foe superior performance. Reason: By asking them to establish their reward, you give them the freedom to decide how they want to enjoy the fruits of their labour.

Manage conflicts with your employees by treating each incident as a distinct challenge. Don’t look for patterns that aren’t really there or you’ll magnify the tension and breed ill will.

Ì Strip away antagonism. Reduce the stakes of the conflict by focusing on a positive outcome, not proving you’re right. Example: Instead of "I don’t think that’s smart," say "I don’t agree, and that’s fine. We both want the same result."

Ì Avoid personal attacks. Analyze the facts of a conflict head-on without adding editorial comments about an employee’s character.

u Make sure you don’t slip into these roles when you and your team meet to analyze a problem:

u An Inquisitor, who asks questions such as, "Why didn’t you take care of this months ago?"

u The Answer Giver, who says something such as, "Only one solution makes any sense."

u A Storyteller, who looks backward with a statement such as, "When we ran into a situation like this two years ago, here’s what we did."

u The Parent, who poses a rhetorical question such as, "How many times must I tell you not to do that?"

Business news | Editorial | Corporate | Cover Feature | Economy & Policy | Inner-view | Opinion Poll | Fashion
| Entertainment | Report | Recent Launches | Management | Marketing | Corporate Law | World brief | Main |