Corporate governance in multicultural organization

Corporate governance refers to the issues associated with the way corporations are structured, managed and operated. The use of the term “corporate governance”, the evolution of the concept and what it entails has started in the early 1980’s.

 Among the first was the Cadbury Committee. They defined the purpose of corporate governance in 1992 namely, as a set of processes, customs and policies that frame the business of the company and help manage the subsidiaries. This is then operationalized in a uniform method through administered or controlled directives.

The most quoted and referred to document in this field is the OECD principles corporate governance. OECD defines it as a set of relationships between a company’s management, its board, its shareholders, and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set. The means of attaining those objectives and performance monitoring are determined. So, the main recommended principles are stated as rights and equitable treatment of shareholders, interests of other stakeholders, role and responsibilities of the board, integrity and ethical behavior, disclosure and transparency.

Intuition and martial arts

Intuition and/or instinct? One thing two names? Significant for all living beings or only human? The animals definitely have instinct. But do they have an intuition as well?

There is a big difference between intuition and instinct! The latter is embedded in genetic code and therefore an inborn complex pattern of behavior existing in every species. It should be distinguished from a reflex - a simple reaction to a specific impulse composed of learned lessons that are wired in brains and based on chemistry and electrical signals through synapses - connections that fire when an impulse comes. And it fires unconsciously.

Intuition fires the same way as instinct but supposedly only in human brain. If it is based on the previous knowledge how come everybody agrees that even a very small child has an intuition? Okay, you can have a different understanding of the intuition as I do, as there are at least two avenues of pursuit when dealing with intuition. One is psychological and the other is spiritual. The spiritual one starts with beliefs, and we are not going to discuss about those issues here. The other avenue is on the psychological level. And this one is, in my opinion, more productive. Research suggest that part of the intuition is that one quickly forms a context using one’s ‘base of experience’ to draw parallels and turn that nonverbal or tacit evidence knowledge into decision-making knowledge.

Knowledge - the main driving factor of productiveness

In modern economy, an insight, based on explicit and tacit knowledge and the wisdom are the main driving factors for value-added creation and sustainable growth. With appropriate understanding and the allocation of resources Violeta Bulc (innovator, entrepreneur and founder of Vibacom Ltd.) describes how the creation of added value in a company can be defined as a progression of different evolutionary stages in the business environment.

In the book “Rhythms of business evolution, systems, tools and experience for brainstorming” Bulc bases her ideas on four phases. The first one begins with the most fundamental “working environment”. At this stage companies are mostly focused on production and activities. Machines (equipment) are very important; the labor force can be relatively easily replaced, so they should be obedient and diligent in maximizing the output at the lowest costs possible.

The second phase is a “learning environment”. The productivity becomes a factor of input. New resources and knowledge start to play a major role as quality is introduced. Knowledgeable workers become of core importance. Those who have knowledge - employees, leaders, managers - create the conditions for further growth and differentiation on the market.

Internet games and Leadership

Most people argue that games are just for fun and to kill time. How would you consider gaming experience in person’s curriculum vitae asking for a leadership position vacancy? An asset?

Nick Yee surveyed MMORPG players for the first time at the end of the previous millennium. Since then, he has surveyed over 35.000 MMORPG players of the most popular USA MMORPG games. Near 280 respondents wrote about their guild leadership experience. Yee’s findings about leadership can be described in the same terms as in the real world.

First, most novice guild leaders fall into the trap of trying to be everyone’s friend and making sure that everyone in the guild is happy. The most common lesson learned was that it’s simply impossible to please everyone. Second, in any situation where people have different needs and motivations, conflicts will arise. These conflicts tend to be particularly stressful because of the existing friendships and ties within the guild. Inevitably, the guild leader will be asked to become the mediator. Third, many respondents noted that laying down a firm hand was important and that sometimes you have to be tough and say no. Because many guilds start off as small, casual, and friendly guilds, guild leaders often feel conflicted when it comes to disciplining guild members. The next finding was the difficulty in picking the right people for the guild, as well as the difficulty in kicking people out of the guild. In the game and in the real life, the duality of being a leader is well perceived. It is not easy to be a friend and a leader at the same time. The guild leaders highlighted the importance of having ground rules, making people aware of them and being consistent with those rules, which is equal to real-life leadership.

Organizational culture and martial arts

Organizations are made for employees to work there and not opposite: employee should fit the organization. As the organization grows larger and more complex, management at the top lead and decide less by firsthand experience, but rather more and more on heavily processed data. From their standpoint they rarely see business flowing in the same way as do people down in production or on the sales floor. To understand huge amounts of data and information that is streaming toward them, after a throughout long training, they finally achieve to see the reality through the distorting glasses they've had to put on. Decisions they make and the responsibility they shoulder relies on tangible data. But these glasses somehow filter out emotions, feelings, sentiments, moods, and almost all the nuances of human situations that are part of everyday organizational culture consequently filtering or better losing all the tacit knowledge that drives business processes.

Organizational culture is the sum of values and rituals defined by rules. It is also a part of a “bigger picture” that surrounds an organization. This poses some problems if organization shock-wave through different cultures.

Four decades ago IBM tried to unify corporate culture in its subsidiaries all over the world. Geert Hofstede carried out a world-wide survey on employee values. The result was very informative and demonstrative. There were other researchers of the same topic too. A common conclusion of all those studies is that “we are definitely different”.

Leadership and stability

Old Chinese philosopher Zhuangzi quoted Confucius: ‘Men do not use running water as a mirror; they only use the still water.’ Only things that are still in themselves can still other things.”

Why the power of stability is so important? The ground on which we stand can hold up tall buildings, high trees, and us as well. Gravity pulls us to the center of our planet. The ground pushes back with precisely the same force, effortlessly in the opposite direction of gravity, and is therefore called the ground reaction force. No wonder grounding is considered so important in martial arts. It resists power and accepts energies. A stability lies within what one knows and how one lives his live each day.

Stability is not equal to rigidity. It is fundamental to all fighting techniques. The ability to control your movements, to develop, and to receive power originates in stability. Losing stability means losing control. Without control you cannot win.  A good fighter knows that during the battle, the sun should be in the eyes of your opponent and not facing yours. Secondly, stability is being able to float safely on each wave of change. Lower a fighter’s position is and the lowest his center of gravity is, the better stability he has. But, while increasing stability lowering a center of gravity lessens mobility. There are always trade-offs but you should balance them into win-win situation.

Control and Reward

“People work predominantly for a reward”. Many MBA students hear and then use in order to control workers’ performance.

Motivation is an enigmatic thing. In different types of organizations managers all around the world struggle to motivate employees to get the best out of them.  And this is a crucial activity on all levels of an organization.

Being a boss does not necessarily mean being a good leader or motivator. There are countless examples reporting intolerable task masters, or ultimate micro-manager, or even horrid manager thus creating a horrible work environment... and the list goes on and on. This kind of a boss is definitely not favored by employees and no motivation comes from him/her. Instead, workers are deeply demotivated by injustices, emptiness of demands, inconsistencies, lack of transparency, self-importance, arrogance, superiority, miss-communication, or even management incompetence. They just try to survive. Still, some of these bosses climb the current Forbes 400 list.