Enterprise Governance: Driving Enterprise Performance Through Strategic Alignment

311 Pages·2014·3.09 MB·English

by  Bharat Vagadia (auth.)

Management for Professionals
Bharat Vagadia
Enterprise
Governance
Driving Enterprise Performance
Through Strategic Alignment
Management for Professionals
For furthervolumes:
http://www.springer.com/series/10101
ThiSisaFMBlankPage
Bharat Vagadia
Enterprise Governance
Driving Enterprise Performance
Through Strategic Alignment
BharatVagadia
London,UnitedKingdom
ISSN2192-8096 ISSN2192-810X(electronic)
ISBN978-3-642-38588-9 ISBN978-3-642-38589-6(eBook)
DOI10.1007/978-3-642-38589-6
SpringerHeidelbergNewYorkDordrechtLondon
LibraryofCongressControlNumber:2013947803
#Springer-VerlagBerlinHeidelberg2014
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I dedicate this book to my late
father Khimji Karsan Vagadia
for showing me the light
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Foreword
International Corporate Governance Network
Wewelcomethisnewadditiontotheworld’scorporategovernancelibrarywitha
refreshing perspective on the importance of governance on the behaviour and
performance of organisations over the long term. Bharat brings his concepts to
lifethroughcasestudiesandinternationalcomparisonsleadingtoaninsightfulread
foranygovernancepractitioner.
Kerrie Waring – Acting Head of Secretariat – International Corporate Gover-
nance Network – The ICGN is a global membership organisation of around 600
leaders in corporate governance based in 50 countries with a mission to raise
standards of corporate governance worldwide that collectively represent funds
undermanagementofaroundUS$18trillion.
Dr. Richard Hale: Professor or Management Development
Ayearbeforetheglobalfinancialcrisisof2008Iwaswithagroupofdeveloping
leadersatamajorUKbank.Anexecutiveleaderhadbeeninvitedtocomeandshare
his wisdom. I asked him over dinner why the bank was continuing to lend to
customers it knew would not be able to repay. ‘All our competitors are doing so
andinanycasethisiscyclical’hesaid.Asthefinancialdebacleunfoldedandthen
thecrisisofleadershipextendedtoallthekeyinstitutionsIhadpreviouslylooked
up to, I reflected frequently on the comments from that leader who bore the
euphemistictitleHeadofRisk.
In this book Dr. Vagadia draws from a range of sources, theories, real
organisations, leaders and not least of all his own commercial and academic
experience,topresentacompellingcasefortheconceptof‘enterprisegovernance’.
Whilstthisalonemaynotbesufficienttofixthecrisisofleadershipfacingsociety
today,itdoescausethereadertostepbackandchallengehownarrowlygovernance
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viii Foreword
hasbeendefinedinorganisations.Appropriatelyinmyviewitalsochallengesthe
traditional business schools to consider what short shrift they give to such an
importantconcept.
The author has an ability to draw on wide-ranging concepts and relate them to
corporate reality. There are few such books which can draw parallels between
corporate governance, particle physics and Indian history! However it is clear
that Dr. Vagadia is more than a thinker and has worked closely with major
corporations–thismeansheisabletoproposehisconceptualisationofenterprise
governancewithacredibledegreeofgranularity.
Ibelievethethemeofethicalleadershipismorerelevantnowthaneverandas
suchthisbookhasaplacewithinthatbodyofliterature.Itpresentsbothchallenges
tothereaderandsomepracticalguidance.Moreovergooduseismadeofinterviews
theauthorhasconductedwithtoplevelleadersfromthebusinessworldandpublic
servicesector.
HavingnowreadDr.Vagadia’sbookIwishithadbeenwrittenafewyearsago
asitmighthavehadanimpactonthatHeadofRiskwhichmightjusthavehadan
impactonorganisationalbehaviour.
Dr. Richard Hale – Professor in Management Development – International
ManagementCentresAssociation
Preface
Therearemanybooksoncorporategovernance,somegood,someprettypoor,but
almostallratherlimitedintheirabilitytodeliversustainedperformanceimprove-
mentfororganisations.
Therehasbeenaflurryofactivityinthecorporategovernanceareafromrevised
rulesandcodestoresearchintotheidentificationofhowpoorcorporategovernance
mayhavecontributedtotherecentfinancialcrisis.Theseallassumethatcorporate
governanceonitsown,significantlyimpactstheoperationoforganisations.
ThroughthisbookIshowhowcorporategovernanceispartofabroaderareaof
governancethatincludesstrategicandoperationalgovernance,andshowhowthese
complement each other. The integration of these three layers of governance has
deep and meaningful impact on organisational behaviour and performance, and
helps explain why even those organisations that were perceived to have robust
‘corporate’governancedisappointedmanyinthewaytheyfaredinthecrisis.
There are subtle differences between governance and management which are
often misinterpreted. These subtleties have led many to ignore vital elements of
strategic and operational governance process. The sheer complexity of
organisations often means it is difficult to identify the boundaries between gover-
nance,leadershipandmanagementandwhoshouldbedoingwhat.Thiscomplexity
often overwhelms the leadership team with many resorting to oversimplification,
centralisation,procrastination,confusion,andlayeruponlayerofbureaucracy.This
results in an organisation where you have busy but ineffective people, significant
interdepartmental conflict, poor organisational alignment, lack of coordination,
unclear responsibilities, significant duplication of effort, poor employee morale,
inadequate employee and stakeholder engagement and where absolutely every-
thing,usefulornot,ismeasuredandreportedasmanagerstryingtocometogrips
with and control what is happening at the levels below them. The result, a rather
stagnant organisation: an organisation that is only surviving because of its past
reputation,becauseithappenstohave somegoodpeople,because it operates ina
fairlystablemarketandbecauseithashadagoodrunofluck.Ifanyofthesefactors
change, the ‘governance shy’ organisation can be in trouble, deep trouble. What
youalsooftenfindintheseorganisationsisthatbecausetheyhavenotadoptedan
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