The simplest approach to governance is to give control over your company to one or a handful of very high-ranking executives. Executives choose the jobs and tasks of the people around them, just as they choose their roles.
Examples of governance might include:
One manager chooses which employees will buy products and how much. A director decides which products will be sold, how much they will sell them for, and how much the overall sales will be.
The two primary managers take a few key decisions out of the head of the company and approve the key decisions of the executives to run the company on their behalf.
The main objective is to reward the executives who do the jobs in the best way possible. To reward success, in other words.
Contrast with the supervisory model of governance, where all employees have certain specific tasks and objectives to achieve at certain times. The supervisory model aims to ensure the long-term success of the company. The supervisory model is also good at ensuring that an organization is run and governed well.
Contrast with the democratic model of governance, where all employees decide on their roles and responsibilities and then their salaries. This method of governance is also good at ensuring a successful company. But this approach is not so good for the long-term success of the company.
Why Governance Is Important
A major part of a successful business is corporate governance. The decisions are taken by the people at the top determine if the business will survive or not. With a democratic approach to governance, the business is vulnerable to the whims of the employees. If there is a problem with one employee, the entire company goes. With a supervisory approach to governance, there is no danger of the whole business going down.
Business is difficult enough as it is. With a democratic approach to running a company, most problems will be solved by whoever takes the hardest decisions. This approach, however, will most likely lead to a failure in the long term. In the longer term, governance problems go beyond the bosses who are responsible for the business.
To successfully run a business, a successful system of governance is necessary. A supervisory system is more beneficial because it guarantees the long-term success of the company.
The Other Alternative
The other alternative to the supervisory system is to go back to the system we were using years ago. That is, the way businesses operate before the introduction of the supervisory system. Nowadays, it is hard to imagine people having the flexibility to go back to an old way of running a business.
But the old system was much more beneficial than a supervisory model. In those days, we did not have large numbers of employees that we need to manage. Plus, the people at the top did not have the authority to choose what they wanted to do, and also, if the workers complained about how they ran things, they could not do anything about it.
With the supervisory system, every decision and action is a personal responsibility. That means the employees have to get involved, leading to every person being aware of every decision around him. And the problem of managing employees will only get worse.
The reason why the supervisory model, as we know it, is better than the supervisory model is that it solves the personal problems that businesses run. The supervisory system ensures that all employees are focus on getting the company to success.
Governance is an essential part of successful businesses. If you want to have an attractive business that continues to grow, you must consider your corporate governance.
I mentioned in Part One how governance and leadership are not about personal achievement. Leadership is a way to develop the skills and tools to manage the people you need to run the business. And, if you want to go further in your leadership development, the advice I gave in Part One is important. But it is not the end of your quest.
The next step will determine if your business will survive or fail. That is to determine your governance and leadership and your governance and leadership as part of your business. We should not be afraid of being bosses. It is necessary to change our business leadership if we want to improve the business as a whole.
As a leader, you realize that people do not have a personal stake in the business. There is not one person out there who has a personal reason for why he does not do well in his leadership role. The personal reasons are because of decisions make by other people that affect him personally. His situation is not the reason he cannot deliver or make the right decisions for the company. So, if there are problems within your business, it is important to put aside personal ambitions and listen to the voices with no personal stake in the business.