It is A CONSTANT in our global society today to read articles about FINANCIAL-PLANNERS AND FRAUD, these two seem to be somehow inseparable. In a recent investigation into one of Quebec’s investment brokerages, and the whereabouts of a broker, as much as $50 million that was entrusted to him seem to have disappeared into thin air. Peter Tzanetakis, vice-president of regulatory affairs at Advocis, the association representing financial advisers in Canada said "The financial advice industry is extremely regulated, financial advisers are typically licensed for insurance purposes and registered for securities and mutual fund purposes, but additional regulation for financial planning would not have any impact on someone who is intending to run a fraudulent scheme."
Please read my blog space:
http://corporategovernanceconcerns.blogspot.com/2008/07/dr-rookmin-maharaj-corporate-governance.html
and my article written in June 2008 about this very serious epidemic that is plaguing not only Canada, but is prevalent around the globe.
The only advise our regulatory bodies can offer include unhelpful remarks as follows:
1) there are plenty of strict guidelines in place already to keep them in check
2) it's a reminder clients need to ask hard questions and avoid blind trust, especially when their life savings are involved
3) The financial advice industry is extremely regulated; financial advisers are typically licensed for insurance purposes and registered for securities and mutual fund purposes
4) additional regulation for financial planning would not have any impact on someone who is intending to run a fraudulent scheme
5) Investors have learned through authorities that Jones, a self-proclaimed financial planner operating in an office tower in a Montreal suburb, was never licensed to handle their money
6) The Financial Planners Standards Council, a not-for-profit organization that raises awareness about financial planning and enforces professional standards through certification, says it's important for consumers to do their homework because anyone can call themselves a financial planner
7) The regulatory environment allows anyone to hold themselves out as a financial planner," said Tamara Smith, vice-president marketing. So it becomes incumbent on the consumer to verify credentials and ask to see certification and references, she said. "It is so important to find a planner you can engage in conversation, that you can trust
8) Sylvain Theberge (representing Quebec's securities regulator - the Autorite des marches financiers )said more inspectors may not be a foolproof solution. "We don't have the ability to be at every door in Montreal, to look at every office," Theberge said, adding more inspectors wouldn't necessarily have led them to Jones. "It's knowing the unknown," Theberge said. "In Mr. Jones' case, he worked for years and years on the basis of a confidence link from generation to generation."
SO WHAT ARE THE ROLES OF THESE SO CALLED REGULATORY BODIES (ABOVE), IF WE, AS EVERYDAY INVESTORS HAVE TO DO THE GROUND WORK FOR THESE SO CALLED REGULATORY BODIES?
REGULATORY BODIES OFFER NO REMEDIES for the average investors, this is a crying shame!
One year ago I wrote about this epidemic. Again, one year later I say the same thing:
It is imperative to note that this fraudulent, unethical behaviour is ALLOWED TO CONTINUE in our society by the pertinent ‘powers’ that be. This fraudulent, unethical behaviour affects families, individuals, and generations to come.
This fraudulent, unethical behaviour may also establish that failures within these companies' corporate cultures and management systems ARE ACTULAY allowed, if not encourage, by key individuals.
Dr. Maharaj argues that:
COULD IT BE THAT THE CONTINUATION OF THE OLD BOYS/GIRLS CLUB may be the fundamental reason for the blatant disregard for humanity? COULD IT BE THAT THERE IS A perception of invincibility/groupthink mentality by these crooks.
COULD IT BE THAT ONCE AN EMPLOYEE IS INCREASING THE PROFITS AND BOTTOM LINE OF AN ORGANIZATION HE/SHE IS SHELTERED BY TOP EXECUTIVES, WHO MAY TURN A BLIND EYE TO UNETHICAL PRACTICES?
And to date we have no remedies from the so called pertinent authorities, whether these watch dog bodies are for-profit or not-for-profit. They have been established to do a job, they are being compensated with some sort of financial consideration. Yet, whenever there is an investigation these ‘so called’ competent authorities’ throw the blame elsewhere. Their only advise to investors include:
“buyer beware” , they take no responsibility!
THE ONLY SOLUTION TO THESE BLATANT INJUDICIOUSNESS include:
changing the behaviours, the regulatory bodies must take responsibility and ensure that they conduct their monitoring duties. Perhaps, the reasons that this is not being done is that the regulatory bodies are not:1) the regulatory bodies are not ‘INDEPENDENT MINDED’
2) the regulatory bodies do not have the knowledge that is required to regulate
3) the regulatory bodies do not have the skills to regulate
This can be achieved by recruiting ‘new regulatory bodies’ in contrast to nominating ‘friends’ and continuing the tradition of the old boys/girls club.
Dr. Maharaj argues that, and has tangible evidence, that what should be done is a forensic audit on 'the people that are hired to these regulatory bodies' What is your opinion? Does your opinion change with this update?
Dr. Rookmin Maharaj’s research on: Corporate Governance on organizations and investigates corporate governance issues from a behavioural viewpoint. It makes a distinction between strict adherence to formal rules and regulations and investigates informal characteristics of regulatory bodies, their knowledge, values, and groupthink mentality.
There are three main conclusions from this research and corporate experience:
1. Proves that formal rules and regulations are inadequate; they have little effect upon decision making.
2. Informal characteristics must be considered in unison with the formal system when incorporating any of these so called watch dog regulatory bodies
3. Similar values and groupthink can contribute positively to corporate decision making. However, there is a high possibility for groupthink and values to become redundant, masking members’ and managements’ knowledge thereby, affecting these regulators decision making process.
4. Skills matrices that include questions related to values, knowledge and groupthink should be considered by corporations to ensure the nomination of well-rounded members, management and employees. Changes to these regulatory bodies, are seminal in preventing future fiascoes.
Monday, July 20, 2009
Friday, June 26, 2009
View from the top: what directors say about board process
View from the top: what directors say about board process- Dr. Rookmin Maharaj
Title: View from the top: what directors say about board processAuthor(s): Dr. Rookmin MaharajJournal: Corporate GovernanceYear: 2009Volume: 9 -Issue: 3 -Page: 326 - 338Publisher: Emerald Group Publishing LimitedAbstract:Purpose – This paper aims to use the argument that formal regulations alone may not be the defining factor in improving corporate governance and the decision making process of the BOD. Design/methodology/approach – Based on 20 semi-structured interviews with board chairs, members of corporate boards, CEOs, and upper/executive management at 12 Canadian companies, a bird's eye view is taken from the top. A content analysis of the interviews was performed. a clear picture about the interaction and behaviour of directors emerged. Subsequently, three objectives that are required for effective decision-making were developed: knowledge; motivation; and transmission channels/internal control. The analysis offers three critical objectives, which all boards should endeavour to accomplish. Findings – These interviews demystify board process and provide the bases for three critical objectives for effective corporate governance: ascertain and embellish the knowledge base of directors; motivate directors to share and gather information; and ensure clear and fluent transmission channels exist. Practical implications – The usual board measures such as CEO duality, insider and outsider ratio, number of board members and directors' share ownership may not be the only critical determinants of board effectiveness. Originality/value – Conventional notions of decision making have neglected key human faculties and individual characteristics that combine to determine organizational outcomes. This paper fulfils a need for research in the area of board processes and board decision making and provides a roadmap to improve corporate governance within organizations.Keywords: Corporate governance, Decision making, Senior management board decision makingArticle Type: Research paperArticle URL: http://www.emeraldinsight.com/10.1108/14720700910964370
Posted by Dr. Rookmin Maharaj at 7:11 AM
Labels: Corporate governance; Decision making;Senior management; board decision making;
Wednesday, January 28, 2009
Corporate governance decision-making model: How to nominate skilled board members, by addressing the formal and informal systems
Article may be viewed in its entirety at:
http://www.palgrave-journals.com/jdg/journal/vaop/ncurrent/index.html#08012009
Dr. Rookmin Maharaj's research study focuses on the problems involved in nominating board members based solely on rules and regulations, which neglect the affective dynamics of board behaviour and board process. For example, choosing board candidates who are independent (not part of a company's management), a rule imposed by the Toronto Stock Exchange (TSX) guidelines, may ensure that an organisation remains listed on this lucrative exchange. However, it does not ensure that the candidates have the necessary knowledge or are well versed in the company's business activities to effectively serve on a particular board. Having independent board members does not ensure that they ask tough questions of themselves or of management or that they have an extensive network from which to draw for advice on strategic issues. These are equally important areas of board governance that cannot be ignored when choosing candidates for the board, and these questions should not be suppressed in favour of concentrating solely on formal concerns such as independence.
Information about board characteristics can provide management theorists with a broader range of 'informal' variables that can contribute to the decision-making process. Board characteristics assist the board in operating as a team, improving the efficiency of the board. Selecting board members with the most suitable and effective characteristics for a particular board ensures that directors are spending their limited time on the company's most important challenges. This research was carried out in several stages in order to gather both qualitative and quantitative data. In this research there was a significant relationship for values and decision-making and no relationship for TSXFormal and decision-making, which is consistent with the literature, suggesting there must be a change in executives' values to ensure changes in behaviour.
A corporate governance model was developed. This model helps in ensuring that boards populated with board members who have knowledge and values (skills matrices) are more aware of the detrimental effect that groupthink can have on the decision-making process. Several executives mentioned the ability of board members 'to apply due diligence' to strategic decision-making. This means that directors apply their experience and expertise to better understand issues and bring these to bear upon the decision-making process. Additionally, knowledge, values and groupthink (skill matrices) may be used both when nominating new board members and as an annual evaluative tool.
Businesses are continually diversifying and board members need to continuously embellish their skill set and knowledge in order to adapt. However, the finding and the development of this corporate governance model are significant as they mark the start of how board characteristics can be operationalised. What is needed is more balanced research that looks at both the formal and the informal system. In doing so, more articulate measures of board decision-making process will evolve.
The business environment is ever changing and dynamic; research in these areas will convey the interrelationship between the formal and informal system. Nevertheless, this research is unique as it has investigated the formal and informal system using both primary qualitative and quantitative data analysis and therefore provides much needed information about the characteristics requisite for nominating board members.
Dr. Rookmin Maharaj's Model can help US President Barack Obama get the United States back on track!!contact Dr. Maharaj : maharajl@netzero.com
http://www.palgrave-journals.com/jdg/journal/vaop/ncurrent/index.html#08012009
Dr. Rookmin Maharaj's research study focuses on the problems involved in nominating board members based solely on rules and regulations, which neglect the affective dynamics of board behaviour and board process. For example, choosing board candidates who are independent (not part of a company's management), a rule imposed by the Toronto Stock Exchange (TSX) guidelines, may ensure that an organisation remains listed on this lucrative exchange. However, it does not ensure that the candidates have the necessary knowledge or are well versed in the company's business activities to effectively serve on a particular board. Having independent board members does not ensure that they ask tough questions of themselves or of management or that they have an extensive network from which to draw for advice on strategic issues. These are equally important areas of board governance that cannot be ignored when choosing candidates for the board, and these questions should not be suppressed in favour of concentrating solely on formal concerns such as independence.
Information about board characteristics can provide management theorists with a broader range of 'informal' variables that can contribute to the decision-making process. Board characteristics assist the board in operating as a team, improving the efficiency of the board. Selecting board members with the most suitable and effective characteristics for a particular board ensures that directors are spending their limited time on the company's most important challenges. This research was carried out in several stages in order to gather both qualitative and quantitative data. In this research there was a significant relationship for values and decision-making and no relationship for TSXFormal and decision-making, which is consistent with the literature, suggesting there must be a change in executives' values to ensure changes in behaviour.
A corporate governance model was developed. This model helps in ensuring that boards populated with board members who have knowledge and values (skills matrices) are more aware of the detrimental effect that groupthink can have on the decision-making process. Several executives mentioned the ability of board members 'to apply due diligence' to strategic decision-making. This means that directors apply their experience and expertise to better understand issues and bring these to bear upon the decision-making process. Additionally, knowledge, values and groupthink (skill matrices) may be used both when nominating new board members and as an annual evaluative tool.
Businesses are continually diversifying and board members need to continuously embellish their skill set and knowledge in order to adapt. However, the finding and the development of this corporate governance model are significant as they mark the start of how board characteristics can be operationalised. What is needed is more balanced research that looks at both the formal and the informal system. In doing so, more articulate measures of board decision-making process will evolve.
The business environment is ever changing and dynamic; research in these areas will convey the interrelationship between the formal and informal system. Nevertheless, this research is unique as it has investigated the formal and informal system using both primary qualitative and quantitative data analysis and therefore provides much needed information about the characteristics requisite for nominating board members.
Dr. Rookmin Maharaj's Model can help US President Barack Obama get the United States back on track!!contact Dr. Maharaj : maharajl@netzero.com
Thursday, January 15, 2009
When Governance Bodies Choose to close their eyes!
The dictionary alternatives for the word ‘Collusion’ include:
conspiracy - Collusion
complicity - Collusion
knowledge - Collusion
consent - Collusion
approval - Collusion
involvement - Collusion
agreement - Collusion
According to Jeff Rubin and Peter Buchanan, who wrote on October 31, 2008, in their article ‘What's the Real Cause of the Global Recession?’In CIBC World Markets Inc. StrategEcon, “Certainly oil shocks are no stranger to recessions. Four of the last five global recessions were preceded by one. Yet the recent spike in oil prices doesn’t seem to get any credit for what’s happening to the world economy now……. That’s odd because it should. Curiously, an over-500% increase in the real price of oil gets virtually ignored as a culprit behind today’s economy, eclipsed by the ongoing crisis in financial markets. Yet the run-up in real oil prices this cycle is over twice the spike in oil prices that occurred during the first or second OPEC oil shock . And those oil shocks produced two of the deepest recessions in the entire post-war period, including the 1980-82 double dip……. And, of course, it hasn’t just been American consumers who have been socked with mounting fuel bills. It’s been true for households from all OECD countries. Over the last five years their annual fuel bill has grown a staggering $700 billion. Of this, $400 billion annually has gone to OPEC producers. Was just Rubin, Buchanan and myself who noticed the the 500% spike in oil prices.
Where were/are governments, directors, CEOs, managers of big business?
Where were/are the decision makers in society?
Where were/are the GOVERNANCE SYTEMS AND STRUCTURES IN OUR GLOBAL SOCIETY?
Well, it seems most have been asleep just filling their coffers. Just let us take a look at who stand to extract (thesaurus search for extract indicates that EXTORT can be used in this instance instead of extract).
1) The governments (all governments around the world) gain substantially through their tax structures.
2) Big businesses and it does not matter if they are the ones who drill the oil wells, the oil and gas boom affects all businesses in a big way, for example, restaurants, groceries, clothing stores, luxury items to name a few, all gain from exorbitant oil prices.
Who are the ones IN SOCIETY who are and will pay for this GREED?
The housing crises in the US IS THE FIRST FALL OUT BY THIS GLOBAL ABUSE OF GOVERNANCE SYSTEMS.
a) The automobile sector is now reeling
b) Obviously if large sectors of the global economy like the automobile, travel, agriculture are negatively affected by ridiculously (out of control) high oil prices the GDP of countries will be comprised. (GOVERNANCE 101; greed by governments and wonton disregard for citizens will lead to downfall of the economy)
According to: “http://www.bloomberg.com/apps/news?pid=20601082&sid=asagaXsaR72M&refer=canada”
“Canadian stocks had their worst weekly slide in a month after energy and financial companies fell today on a record drop in U.S. retail sales that fueled concern the recession will cut demand for Canada's exports. EnCana Corp., Canada's biggest energy company by market value, and Royal Bank of Canada, the biggest lender, declined after the retail report. BlackBerry e-mail phone maker Research in Motion Ltd. led the week's declines on analyst estimate cuts and a worsening outlook for mobile phones. Gold producers led weekly gains on the index. The Standard & Poor's/TSX Composite Index fell 3.2 percent to 9,055.96 today in Toronto. ……….. the worst weekly performance since Oct. 10. Retail sales in the U.S. dropped 2.8 percent ………….. pushing the world's biggest economy toward its worst slump in decades. Spending may continue to falter from job losses, plunging stocks and falling home values, the Commerce Department said today. ``This retail sales number was horrific,'' said John Stephenson, who helps to oversee about $1.5 billion at First Asset Investment Management Inc. in Toronto. ``………………..How can the U.S. have a cold and we not catch the flu?'' The Standard & Poor's 500 Index fell 4.2 percent to 873.29, extending a second straight weekly loss, and has lost 41 percent this year. In Canada, the S&P/TSX ……………. has fallen 35 percent this year and 40 percent from a June high. Oil Declines Crude oil for December delivery fell $1.94, or 3.3 percent, to $56.30 ………….. EnCana dropped 5.8 percent to C$54.75 today. Suncor Energy Inc. fell 3.5 percent to C$23.34. Financial institutions worldwide have posted more than $950 billion in losses and credit writedowns this year as the worst financial slump since the Great Depression worsens……….`Same Brush' //``The financials are actually being tarred with the recession brush as well,'' said John Kinsey, who helps manage about C$1 billion for Caldwell Securities Ltd. in Toronto. ``It looks like we're going to get maybe a world recession, and the next step is the big question, whether it'll turn into a depression.''
So what part does Governance play in this catastrophe?
We are all stakeholders in our communities; some of us are shareholders in these organizations. Shareholders are the owners of the corporation who are imbued with the authority to elect directors to represent their interests and govern the corporation. We need to address this situation that has gone corrupt, distorted, and awry. We can exercise our votes either through our voting power or through reducing our demand.
HOW CAN WE ENSURE THAT THIS DOES NOT EVER HAPPEN AGAIN?
Dr. Rookmin Maharaj has developed a unique and revolutionary model that can identify the characteristics requisite for effective Corporate Governance within an organization that strikes the ideal balance between the formal and informal rules and regulations. Dr. Maharaj has researched with the top oil and gas, mining, chemical, and pipeline companies in North America. She continues to transform ideas into actions, ultimately increasing the bottom line for She is currently consulting with companies in Alberta, Canada on Corporate Governance. She has worked in the energy sector in Alberta Canada for over fifteen years. She has a master’s degree in Higher Education and has taught in France, the Caribbean and in Canada at the University of Calgary and Mount Royal College on Environmental Management and Business. Contact:rmaharaj@ucalgary.ca, maharajl@netzero.net
conspiracy - Collusion
complicity - Collusion
knowledge - Collusion
consent - Collusion
approval - Collusion
involvement - Collusion
agreement - Collusion
According to Jeff Rubin and Peter Buchanan, who wrote on October 31, 2008, in their article ‘What's the Real Cause of the Global Recession?’In CIBC World Markets Inc. StrategEcon, “Certainly oil shocks are no stranger to recessions. Four of the last five global recessions were preceded by one. Yet the recent spike in oil prices doesn’t seem to get any credit for what’s happening to the world economy now……. That’s odd because it should. Curiously, an over-500% increase in the real price of oil gets virtually ignored as a culprit behind today’s economy, eclipsed by the ongoing crisis in financial markets. Yet the run-up in real oil prices this cycle is over twice the spike in oil prices that occurred during the first or second OPEC oil shock . And those oil shocks produced two of the deepest recessions in the entire post-war period, including the 1980-82 double dip……. And, of course, it hasn’t just been American consumers who have been socked with mounting fuel bills. It’s been true for households from all OECD countries. Over the last five years their annual fuel bill has grown a staggering $700 billion. Of this, $400 billion annually has gone to OPEC producers. Was just Rubin, Buchanan and myself who noticed the the 500% spike in oil prices.
Where were/are governments, directors, CEOs, managers of big business?
Where were/are the decision makers in society?
Where were/are the GOVERNANCE SYTEMS AND STRUCTURES IN OUR GLOBAL SOCIETY?
Well, it seems most have been asleep just filling their coffers. Just let us take a look at who stand to extract (thesaurus search for extract indicates that EXTORT can be used in this instance instead of extract).
1) The governments (all governments around the world) gain substantially through their tax structures.
2) Big businesses and it does not matter if they are the ones who drill the oil wells, the oil and gas boom affects all businesses in a big way, for example, restaurants, groceries, clothing stores, luxury items to name a few, all gain from exorbitant oil prices.
Who are the ones IN SOCIETY who are and will pay for this GREED?
The housing crises in the US IS THE FIRST FALL OUT BY THIS GLOBAL ABUSE OF GOVERNANCE SYSTEMS.
a) The automobile sector is now reeling
b) Obviously if large sectors of the global economy like the automobile, travel, agriculture are negatively affected by ridiculously (out of control) high oil prices the GDP of countries will be comprised. (GOVERNANCE 101; greed by governments and wonton disregard for citizens will lead to downfall of the economy)
According to: “http://www.bloomberg.com/apps/news?pid=20601082&sid=asagaXsaR72M&refer=canada”
“Canadian stocks had their worst weekly slide in a month after energy and financial companies fell today on a record drop in U.S. retail sales that fueled concern the recession will cut demand for Canada's exports. EnCana Corp., Canada's biggest energy company by market value, and Royal Bank of Canada, the biggest lender, declined after the retail report. BlackBerry e-mail phone maker Research in Motion Ltd. led the week's declines on analyst estimate cuts and a worsening outlook for mobile phones. Gold producers led weekly gains on the index. The Standard & Poor's/TSX Composite Index fell 3.2 percent to 9,055.96 today in Toronto. ……….. the worst weekly performance since Oct. 10. Retail sales in the U.S. dropped 2.8 percent ………….. pushing the world's biggest economy toward its worst slump in decades. Spending may continue to falter from job losses, plunging stocks and falling home values, the Commerce Department said today. ``This retail sales number was horrific,'' said John Stephenson, who helps to oversee about $1.5 billion at First Asset Investment Management Inc. in Toronto. ``………………..How can the U.S. have a cold and we not catch the flu?'' The Standard & Poor's 500 Index fell 4.2 percent to 873.29, extending a second straight weekly loss, and has lost 41 percent this year. In Canada, the S&P/TSX ……………. has fallen 35 percent this year and 40 percent from a June high. Oil Declines Crude oil for December delivery fell $1.94, or 3.3 percent, to $56.30 ………….. EnCana dropped 5.8 percent to C$54.75 today. Suncor Energy Inc. fell 3.5 percent to C$23.34. Financial institutions worldwide have posted more than $950 billion in losses and credit writedowns this year as the worst financial slump since the Great Depression worsens……….`Same Brush' //``The financials are actually being tarred with the recession brush as well,'' said John Kinsey, who helps manage about C$1 billion for Caldwell Securities Ltd. in Toronto. ``It looks like we're going to get maybe a world recession, and the next step is the big question, whether it'll turn into a depression.''
So what part does Governance play in this catastrophe?
We are all stakeholders in our communities; some of us are shareholders in these organizations. Shareholders are the owners of the corporation who are imbued with the authority to elect directors to represent their interests and govern the corporation. We need to address this situation that has gone corrupt, distorted, and awry. We can exercise our votes either through our voting power or through reducing our demand.
HOW CAN WE ENSURE THAT THIS DOES NOT EVER HAPPEN AGAIN?
Dr. Rookmin Maharaj has developed a unique and revolutionary model that can identify the characteristics requisite for effective Corporate Governance within an organization that strikes the ideal balance between the formal and informal rules and regulations. Dr. Maharaj has researched with the top oil and gas, mining, chemical, and pipeline companies in North America. She continues to transform ideas into actions, ultimately increasing the bottom line for She is currently consulting with companies in Alberta, Canada on Corporate Governance. She has worked in the energy sector in Alberta Canada for over fifteen years. She has a master’s degree in Higher Education and has taught in France, the Caribbean and in Canada at the University of Calgary and Mount Royal College on Environmental Management and Business. Contact:rmaharaj@ucalgary.ca, maharajl@netzero.net
Lack of use of Dr. Rookmin Maharaj's Corporate Governance Model
In Washington news, according to Eric Lichtblau, in an article entitled— Federal Cases of Stock Fraud Drop Sharply: Lichtblau noted that Federal officials are bringing far fewer prosecutions as a result of fraudulent stock schemes than they did eight years ago. This situation begs other questions about whether the Bush administration has been too lax in policing Wall Street. “Legal and financial experts say that a loosening of enforcement measures, cutbacks in staffing at the Securities and Exchange Commission, and a shift in resources toward terrorism at the F.B.I. have combined to make the federal government something of a paper tiger in investigating securities crimes”. If Dr. Maharaj’s Corporate Governance Model was used as a litmus test not only for federal agencies but by the average investor, the $50 billion Ponzi scheme that Bernard L. Madoff is accused of running may have been avoided altogether.
HOW CAN WE ENSURE THAT THIS DOES NOT HAPPEN?
Dr. Rookmin Maharaj has developed a unique and revolutionary model that can identify the characteristics requisite for effective Corporate Governance within an organization that strikes the ideal balance between the formal and informal rules and regulations. Dr. Maharaj has researched with the top oil and gas, mining, chemical, and pipeline companies in North America. She continues to transform ideas into actions, ultimately increasing the bottom line for She is currently consulting with companies in Alberta, Canada on Corporate Governance. She has worked in the energy sector in Alberta Canada for over fifteen years. She has a master’s degree in Higher Education and has taught in France, the Caribbean and in Canada at the University of Calgary and Mount Royal College on Environmental Management and Business. Contact:rmaharaj@ucalgary.ca, maharajl@netzero.net
HOW CAN WE ENSURE THAT THIS DOES NOT HAPPEN?
Dr. Rookmin Maharaj has developed a unique and revolutionary model that can identify the characteristics requisite for effective Corporate Governance within an organization that strikes the ideal balance between the formal and informal rules and regulations. Dr. Maharaj has researched with the top oil and gas, mining, chemical, and pipeline companies in North America. She continues to transform ideas into actions, ultimately increasing the bottom line for She is currently consulting with companies in Alberta, Canada on Corporate Governance. She has worked in the energy sector in Alberta Canada for over fifteen years. She has a master’s degree in Higher Education and has taught in France, the Caribbean and in Canada at the University of Calgary and Mount Royal College on Environmental Management and Business. Contact:rmaharaj@ucalgary.ca, maharajl@netzero.net
Corporate governance decision-making model: How to nominate skilled board members, by addressing the formal and informal systems
This research study focuses on the problems involved in nominating board members based solely on rules and regulations which neglect the affective dynamics of board behaviour and board process. For example, choosing board candidates who are independent (not part of a company’s management), a rule imposed by the Toronto Stock Exchange guidelines, may ensure that an organisation remains listed on this lucrative exchange. However, it does not ensure that the candidates have the necessary knowledge or are well versed in the company's business activities to effectively serve on a particular board.
Having independent board members does not ensure that they ask tough questions of themselves or of management or that they have an extensive network from which to draw on for advice on strategic issues. These are equally important areas of board governance that cannot be ignored when choosing candidates for the board, and these questions should not be suppressed in favour of concentrating solely on formal concerns such as independence.
Information about board characteristics can provide management theorists with a broader range of ‘informal’ variables that can contribute to the decision-making process. Board characteristics assist the board to operate as a team, improving the efficiency of the board. Selecting board members with the most suitable and effective characteristics for a particular board ensures that directors are spending their limited time on the company’s most important challenges.
This research was carried out in several stages in order to gather both qualitative and quantitative data. In this research there was a significant relationship for Values and Decision-making and no relationship for TSXFormal and Decision-making, which is consistent with literature suggesting there must be a change in executives’ values to ensure changes in behaviour. A Corporate Governance model was developed that demonstrates the efficacy in ensuring that boards populated with board members who have Knowledge, Values (Skills Matrices) are more aware of the detrimental effect that Groupthink can have on the Decision-making process.
Several executives mentioned the ability of board members “to apply due diligence” to strategic decision-making. This means that directors apply their experience and expertise to better understand issues and bring these to bear upon the decision-making process. Additionally, Knowledge, Values, Groupthink (Skill Matrices) may be used both when nominating new board members and as an annual evaluative tool. Businesses are continually diversifying and board members need to continuously embellish their skill set and knowledge to adapt.
However, the finding and the development of this Corporate Governance Model are significant as they mark the start of how board characteristics can be operationalized. What is needed is more balanced research that looks at both the formal and informal system. In doing so, more articulate measures of board decision-making process will evolve. The business environment is ever changing and dynamic, research in these areas will convey the interrelationship between the formal and informal system.
Nevertheless, this research is unique as it has investigated the formal and informal system using both primary qualitative and quantitative data analysis and provides much needed information about characteristics requisite for nominating board members.
Full article may be read at:
http://www.palgrave-journals.com/jdg/journal/vaop/ncurrent/index.html
Corporate governance decision-making model: How to nominate skilled board members, by addressing the formal and informal systems
Int J Discl Gov advance online publication, January 8, 2009; doi:10.1057/jdg.2008.27
Having independent board members does not ensure that they ask tough questions of themselves or of management or that they have an extensive network from which to draw on for advice on strategic issues. These are equally important areas of board governance that cannot be ignored when choosing candidates for the board, and these questions should not be suppressed in favour of concentrating solely on formal concerns such as independence.
Information about board characteristics can provide management theorists with a broader range of ‘informal’ variables that can contribute to the decision-making process. Board characteristics assist the board to operate as a team, improving the efficiency of the board. Selecting board members with the most suitable and effective characteristics for a particular board ensures that directors are spending their limited time on the company’s most important challenges.
This research was carried out in several stages in order to gather both qualitative and quantitative data. In this research there was a significant relationship for Values and Decision-making and no relationship for TSXFormal and Decision-making, which is consistent with literature suggesting there must be a change in executives’ values to ensure changes in behaviour. A Corporate Governance model was developed that demonstrates the efficacy in ensuring that boards populated with board members who have Knowledge, Values (Skills Matrices) are more aware of the detrimental effect that Groupthink can have on the Decision-making process.
Several executives mentioned the ability of board members “to apply due diligence” to strategic decision-making. This means that directors apply their experience and expertise to better understand issues and bring these to bear upon the decision-making process. Additionally, Knowledge, Values, Groupthink (Skill Matrices) may be used both when nominating new board members and as an annual evaluative tool. Businesses are continually diversifying and board members need to continuously embellish their skill set and knowledge to adapt.
However, the finding and the development of this Corporate Governance Model are significant as they mark the start of how board characteristics can be operationalized. What is needed is more balanced research that looks at both the formal and informal system. In doing so, more articulate measures of board decision-making process will evolve. The business environment is ever changing and dynamic, research in these areas will convey the interrelationship between the formal and informal system.
Nevertheless, this research is unique as it has investigated the formal and informal system using both primary qualitative and quantitative data analysis and provides much needed information about characteristics requisite for nominating board members.
Full article may be read at:
http://www.palgrave-journals.com/jdg/journal/vaop/ncurrent/index.html
Corporate governance decision-making model: How to nominate skilled board members, by addressing the formal and informal systems
Int J Discl Gov advance online publication, January 8, 2009; doi:10.1057/jdg.2008.27
Friday, September 26, 2008
Harper wants to crack down on Gas-Price Fixing in Canada!
How can Mr. Harper even attempt such an endeavour when:
The proliferation and scope of the corporation have now reached mammoth proportions, there are over 40, 000 corporations in the world, and two hundred giant corporations now control over a quarter of the world’s economic activity. Philip Morris, an American corporation which operates in 171 countries has annual revenues larger than that of New Zealand’s economy. Of the 100 largest economies, in the world, 51 are corporations, only 49 are countries. Corporations are calling the shots and in fact actively formulating policy.
Today, the public corporation itself operates as a form of representative government. In the olden days ‘the church’ called the shots today ‘BIG BUSINESS’ have taken over the power that was once held by ‘DEMOCRATIC GOVERNMENTS’. We have a government in power who stated that they plan, “to go after gas companies with price fixing legislation that would make it easier to prove collusion”
(http://news.sympatico.msn.ctv.ca/Home/ContentPosting?newsitemid=CTVNews%2f20080924%2felection2008_economy_worries_080925&feedname=CTV-TOPSTORIES_V3&show=False&number=0&showbyline=True&subtitle=&detect=&abc=abc&date=TrueHarper wants to crack down on gas-price fixing).
Is it not clear that we as consumers have been and are being gouged by these oil companies?
Continuing in this same article, “Tories say they will widen the price-fixing provisions in the Competition Act and almost triple the maximum penalties to 14 years in prison and a $25-million fine”. Certainly we can count on never witnessing One Company being fined in our lifetime.
The revenue collected by our ‘DEMOCRATIC CANADIAN GOVERNMENT’ is filling the coffers, why would they enforce ‘provisions in the Competition Act’; to reduce the revenue they are collecting from these oil sands, oil and gas, and pipeline companies?
So what part does Corporate Governance play in this scenario?
We are all stakeholders in our communities, some of us are shareholders in these organizations. Shareholders are the owners of the corporation who are imbued with the authority to elect directors to represent their interests and govern the corporation. We need to address this situation that has gone corrupt, distorted, and awry. We can exercise our votes either through our voting power or through reducing our demand. Please read my article
(http://www.advaitaashrama.org/pb_archive/2006/PB_2006_September.pdf)
for some solutions to this crisis in our global society.
The proliferation and scope of the corporation have now reached mammoth proportions, there are over 40, 000 corporations in the world, and two hundred giant corporations now control over a quarter of the world’s economic activity. Philip Morris, an American corporation which operates in 171 countries has annual revenues larger than that of New Zealand’s economy. Of the 100 largest economies, in the world, 51 are corporations, only 49 are countries. Corporations are calling the shots and in fact actively formulating policy.
Today, the public corporation itself operates as a form of representative government. In the olden days ‘the church’ called the shots today ‘BIG BUSINESS’ have taken over the power that was once held by ‘DEMOCRATIC GOVERNMENTS’. We have a government in power who stated that they plan, “to go after gas companies with price fixing legislation that would make it easier to prove collusion”
(http://news.sympatico.msn.ctv.ca/Home/ContentPosting?newsitemid=CTVNews%2f20080924%2felection2008_economy_worries_080925&feedname=CTV-TOPSTORIES_V3&show=False&number=0&showbyline=True&subtitle=&detect=&abc=abc&date=TrueHarper wants to crack down on gas-price fixing).
Is it not clear that we as consumers have been and are being gouged by these oil companies?
Continuing in this same article, “Tories say they will widen the price-fixing provisions in the Competition Act and almost triple the maximum penalties to 14 years in prison and a $25-million fine”. Certainly we can count on never witnessing One Company being fined in our lifetime.
The revenue collected by our ‘DEMOCRATIC CANADIAN GOVERNMENT’ is filling the coffers, why would they enforce ‘provisions in the Competition Act’; to reduce the revenue they are collecting from these oil sands, oil and gas, and pipeline companies?
So what part does Corporate Governance play in this scenario?
We are all stakeholders in our communities, some of us are shareholders in these organizations. Shareholders are the owners of the corporation who are imbued with the authority to elect directors to represent their interests and govern the corporation. We need to address this situation that has gone corrupt, distorted, and awry. We can exercise our votes either through our voting power or through reducing our demand. Please read my article
(http://www.advaitaashrama.org/pb_archive/2006/PB_2006_September.pdf)
for some solutions to this crisis in our global society.
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