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How Corporate Governance Is The Control Of The Strategic Direction Of An Organization

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Corporate governance is the control of the strategic direction of an organization by the board of directors through exercising their power and influence as the stakeholders. It may also be explained as policies, processes, customs and laws that are utilized to direct, control and administer an organization (Feld & Ramsinghani, 2013). In an organization, pursuing the set goals should be done according to a set of policies and processes that are as fundamental as the federal laws that govern the running of any business or organization. These formal duties and processes are upheld by the board of directors and include the duty of loyalty and duty of care as well as formation of committees which may include the audit committee, nominating…show more content…
These individuals are either appointed to the board or are elected to the board (Sciarra & Dorsey, 2002). For startup companies, the boards are chosen by the entrepreneur while for the developed organization the board members are elected according to the regulations necessitated by the law and stated in the by-laws of the company. Those chosen to be appointed or elected to the board are well verified by considering their backgrounds, the personality of these chosen individuals. Processes involved for an individual to be a board member are well regulated by the company 's by-laws and the federal laws of businesses. Firstly, the organization details what it requires from a board member, and then the board identifies a prospect. The prospects are asked to apply, and qualified candidates are oriented to understand the organization then are interviewed for the position and the qualified individual becomes a board member. According to recent laws, becoming a board member has become a formally, regulated affair (Baker & Ronald, 2010). An effective board requires a right composition of board members, a mix of different skills, knowledge, expertise and experience that fits the strategic goals and objectives of the organization. Individuals that comprise a board should have long term experiences, different expertise and influence in the society (Lysakowski, 2004). Some of the expertise and experience required by every
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