Trending
News: It is now compulsory for Nigerian corporations (Public &Private) to
comply with the Codes of Corporate Governance
Why
is this important?
To ensure the economic stability of the
country, to protect the interest of the least person in the society, the
corporations, their employees, customers and shareholders
Long
Story Short
The Code of Corporate Governance for Public
Companies and the Code of Corporate Governance for Banks in Nigeria do not
ensure that Managers of corporations (Public and Private) in the country
possess leadership qualities
Long
Story
Have you ever wondered why some companies
become insolvent, or did you know about the economic crisis (which started from
UK and US) that rocked the global market in 2008, or have you probably read
about why the Nigerian banking sector was in crisis in 1989-1991, or why do
public office holders mismanage resources of their corporations? A recent
example in my country would be the allegation made by the Minister of Finance
against NIMASA accusing the corporation of various sharp practices.
Fundamentally, these fraudulent practices are possible because those in charge
have little or no regard for good corporate governance practices or they lack
the basic qualities required of good leaders. Thus, I have the mandate to
campaign more in support of good corporate governance and leadership in both private
and public sectors of the Nigerian economy.
What
is Corporate Governance?
Corporate governance is the ability to put
in place proper systems and proper processes for ensuring the effective
management of an organisation and the oversight function of managing the organisation,
the proper process includes the mode by which the organisation is governed and
by which the activities of the company are conducted, it places emphasis on
integrity, order, efficiency, accountability and responsibility which are
qualities required of those in charge of the management of the corporation.
Simply put, it is a set of process, customs, policies, laws and institutions
affecting the way in which a corporation is directed, administered or
controlled. It is the overall strategic plan to make the company grow, which if
practiced diligently will attract investment to the company and on the larger
scale, countries with good corporate governance mechanisms attract foreign
direct investment more than those countries without such structure.
What
is Leadership?
Leadership is the process of motivating,
inspiring, and influencing individuals and groups to set and achieve goals by
pulling people who want to follow voluntarily, hence, the leader is someone
with vision and interpersonal skills that guides, influences, or heads the
direction of a group, or team in a non-coercive modelling manner. It is
important for an organisation to have a focal person that is responsible for
coordinating the activities of the organisation and for showing good example so
that the employees and the customers will have confidence in following him or
her in achieving the objectives of the organisation.
On
the failure of Corporations
Fundamentally, the failure of big corporate
organisations is caused by bad corporate governance practices, the
organisations without accounting responsibility, operations responsibility,
proper rules and regulations by which it operates will be free for all and such
will hardly survive. This makes the issue of corporate governance extremely
important to the economy of any nation. Due to the importance of some of these big
companies to the economy of the nation and stability of the economy, the
governments of developing countries like Nigeria have now taken the issue of
corporate governance more seriously.
How
does the issue of Corporate Governance affect the least person in the society?
If resources are channeled to a company
and the resources are not properly utilized, the company will not create
additional value, 10 chances to 1, if it is a corporate, it becomes bankrupt
and insolvent, hence, those who are employed will lose their jobs, those who
are suppliers and indirect beneficiaries of the company will lose their means
of livelihood, the company does not pay tax to government, the whole economic
development mechanism of the state is jeopardized by the company that has
failed and the company has failed because it was not properly governed, there
is a symbiotic relationship between
economic growth and corporate governance. States that are economically
developed have strong corporate governance structures, capital flows into
economy where the corporate governance is good and strong, there will always be
capital and investment, if people think the corporate governance structure of a
country is weak, then there capital goes somewhere else and there will not be
capital that helps capital formation and growth in that country.
Is
there any correlation between Corporate Governance and Leadership?
Corporate governance structure can only be
administered by a good leader, a good leader will have good systems of checks
and balances, will be responsible, there will be integrity and transparency,
processes and systems will be trusted and trust worthy. A good leader upholds
good corporate governance.
How
effective have the codes been in ensuring good corporate governance practices
and what are the prospects?
Certainly, the codes have improved corporate
governance especially when it is now mandatory for publicly listed companies to
adhere to the code, similarly for banks. It has improved the process, managers
and executives have become more aware of the need for good corporate governance
practices. However, though the process has improved, it has not yet encouraged
the creation of great institutions and corporations within the country, it is
an evolving process and the work done by the Atedo Peterside Committee is a
very great step in the right direction.
Managers
v Leaders
There is a difference between management
and leadership, management is the ability to put together tools of production
and put them to work, a fairly successful manager can afford not to be a
leader, but there cannot be a great manager who is not a leader. While a leader
focuses on people to bring out the best in them and make them get the best out
of the materials at their disposal, a manager focuses on how to make use of
people for a particular purpose, leaders build people, managers use people.
Managers are at the back of their employees and they push them, the leader is
at the front and pulls people. However, there are similar traits, both the
leader and the manager have vision, are responsible to set and achieve goals,
hold themselves accountable, continually improve the situation and listen. A
person can be both the manager and the leader (but they require two distinct
sets of skills), not all managers are leaders, not all leaders are managers, in
an organisation, the leader can be anyone (position is not required), the top
person in every organisation is not necessarily the leader (could be a manager
only). However, every manager should be a leader, there are poor managers and
there cannot be a great manager that does not possess good leadership
qualities.
The
Code of Corporate Governance for Public Companies, the Code of Corporate
Governance for Banks v Leadership
The codes only set down parameters by which
those who govern companies and institutions (public and private) should operate
in the interest of their corporations, so that the companies can be well managed
and governed but it does not create leaders
On
how to teach managers leadership qualities
Corporations should have mechanisms for
teaching their managers leadership qualities, leaders should teach prospective
and aspiring leaders, aspiring leaders should read and learn about leadership
qualities, every good leader must have a good succession plan, there must be
people that are better than you that will take over from you, thus, you must
mentor, train, teach and expose once you have identified people that have the
prospects of becoming good leaders cum managers.
Own
the Conversation
Ask
The Big Question: Does the aforementioned points
apply to politicians or public office holders?
Disrupt
Your Feed: Business
schools/courses equip prospective managers with skills needed to run and lead
corporations effectively
Drop
this Fact: No one is born a great manager or leader
Damilola Oyebayo is an expert in
leadership and management development. For over 3 years, Damilola has helped
many leaders and aspiring leaders improve their leadership capabilities.
Damilola is also considered one of the world’s young motivational writers and
speakers and he is the founder of Reality Check, a consulting column that helps
readers discover their dreams, improve their skills and lead value-oriented
lives.
Damilola Oyebayo
LinkedIn: @ Oyebayo Damilola, Twitter:
@Oyebayod
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