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Corporate Governance

kurumsallasma-4“Trust is the essence of development”

The private sector is fast becoming the locomotive of world economic development just as the corporations’ area of responsibility is expanding to cover all stakeholders and not just shareholders. At the same time, corporations are increasingly relying on the international financial markets to face competitive pressures. As a result, it is vitally important that financial markets and all other parties interacting with corporations have full trust in a company’s institutional structures.

Corporate Governance that regulates the principles, the distribution and organization of powers and responsibilities between Shareholders, Board of Directors and the Management makes reliability and transparency a precondition for development.

ARGE offers consultancy services in the following areas to secure the building of such institutional structure:

  • Defining the powers and responsibilities of the Boards of Directors
  • The operational procedures of the Boards
  • Election rules for the Board
  • The power and responsibilitty of the Chairperson of the Board
  • The qualifications of members of the Board
  • Performance management for the Board

Our work leads corporations and institutional structures to privilege the following areas

  • Having a developed sense of accountability
  • Assuring the independence of mechanisms of oversight
  • Developing fair and transparent relations with all shareholders
  • Increasing sensitivity for social responsibility
  • Fulfilling legal responsibilities

In organizations that comprise more than one company or business segment, it is critically important to define the relations and the distribution of power and responsibilities between the center and the companies to efficiently manage the entire structure.

ARGE assures that companies or business segments will build their management structures by concentrating on:

  • the composition of their portfolios, investment priorities, the stability of the competitive environment in their business
  • financial conditions, headquarter staff qualifications and management qualifications for their intra-organizational resources

Different management structures assign different roles to the headquarters in planning (contribution to strategy making in business segments) and control (the degree of oversight on business results). ARGE provides guidance for the building of institutional mechanisms bearing in mind the role of distribution.

All such work aims at establishing Corporate Governance in the organization. ARGE offers its methods, knowledge and experience for instituting trust in the organization.

We published two books on corporate governance “Boardroom Secrets” and “ARGE Corporate Governance Model”. Boardroom Secrets focuses on the structure, processes, and behaviors for the board of directors to ensure good governance. It addresses the behavioral aspects of governance such as how to evaluate and process information provided to the board; how to critically question without de-motivating; how to avoid group think; how to evaluate risk vs. reward; how to provide guidance without interfering with management; how to provide oversight without crippling initiative taking; and how to balance interests of different stakeholders.

The second book explains a model to measure effectiveness of corporate governance.

Recent high profile corporate failures have clearly demonstrated that good governance is the key to sustainability of the corporation. Good governance is a lot more than compliance. It is a culture and a climate of consistency, responsibility, accountability, fairness, transparency, and effectiveness that isdeployed throughout the organization. (CRAFTED principles of governance) This book focuses on the behavioral aspects of good governance and helps address questions such as:

How confident are you that the Board of Directors of your company is providing the right kind of guidance and oversight?

Do you think that in your company the right balance is achieved in the following areas?

  • risk vs. reward;
  • short term vs. long term;
  • effective oversight vs. motivating management;
  • ethical considerations vs. market practices; and
  • competing interests of different stakeholders (shareholders, small and large; partners; management; employees; suppliers; dealers; customers; industry players; public administrators; and community at large.)

Does your Board pay adequate attention to?

  • Adoption of a strategic planning process;
  • A process for identifying major risk areas (in strategic, operational, leadership, partnerships, and reputation dimensions) and ensuring adequate mitigation strategies and systems are implemented;
  • Succession planning, including development plans for senior management and monitoring progress as well as compensation policies to ensure ability to attract and retain high quality management team
  • Communication and disclosure policies with authorities, investors, analysts, and press;
  • Integrity of internal control and management information systems, including assurance of the independence of the outside auditors and availability of a fair and independent whistle-blowing process;
  • Adoption of a self evaluation process for the Board covering the composition, processes, timely and relevant information availability, culture and climate, and learning for continuous improvement areas.