company culture

Company Culture Starts With Corporate Governance

You’ve seen the headlines—“company culture” is one of the most-covered topics in business leadership over the past couple of years. You can read about why you shouldn’t just let your company culture happen.

You can explore “Why Corporate Culture Is Becoming More Important.” And, you can see how productive culture will boost your organization’s performance.

Before we launch into how company culture begins with the board, let’s define the term we’re using.

The Definition of Company Culture

According to Wikipedia, company culture (also referred to as organizational culture) “encompasses values and behaviors that contribute to the unique social and psychological environment of an organization…and includes the organization’s vision, values, norms, systems, symbols, language, assumptions, environment, location, beliefs, and habits.”

Yes, that’s a long definition! To simplify, culture is created through a blend of the practices, policies, and people that make up an organization.
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corporate governance books

Top Five Corporate Governance Books

Are you looking to take a deeper dive into the world of corporate governance? We’ve put together a collection of books and reading suggestions for board directors.

Reading Suggestions for Board Directors

Dear Chairman

This fascinating read by hedge fund manager and adjunct professor at Columbia Business School, Jeff Gramm, digs deep into the ever-evolving relationship between corporate directors and shareholder activists.

“Gramm analyzes different eras and pivotal boardroom battles from the last century to understand the factors that have caused shareholders and management to collide. Throughout, he uses the letters to show how investors interact with directors and managers, how they think about their target companies, and how they plan to profit.”

Who should read? Public company and corporate directors as well as board members with an interest in the history of shareholder activism.
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Navigating Corporate Bankruptcy on a Board of Directors

corporate bankruptcy

Because board members have a financial duty to their shareholders, the time may come when an insolvent organization must consider the option of bankruptcy in order to protect those investors’ interests.

In many states, creditors are also designated as stakeholders and must be considered, too. Depending on the type of corporate bankruptcy that is filed, board members may continue to operate in their directorial positions.

As an organization approaches the position of insolvency, board members must consider the options in front of them. According to the Houston Chronicle, “Conducting a thorough financial review and seeking professional help are now the primary concerns.

Directors should avoid resigning because those who quit rather than engage themselves in the bankruptcy proceedings are generally viewed as being in derogation of duty.” In other words, board members shouldn’t jump ship during the company’s moment of greatest need.
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Finding the Balance Between Board and Management

balance between board and management

Boards of directors and management executives are integral to the success of any major company and finding the right balance in board management is key. Although they’re constantly communicating, they serve in very different roles.

The board, which is meant to contain an appropriate mix of “outside” and “inside” directors, acts as the guiding force for the company while the CEO and other c-suite leaders carry out their plans for the future.

That’s not to say that forward progress and change can’t come directly from the CEO, though.

Duties of the Board

At the end of the day, the board has the final say when it comes to making major decisions for the organization it serves. The entity is expected to uphold its fiduciary duties to the shareholders above all else. In addition, the board hires/fires CEOs, votes on important policies, safeguards resources, and more. For a more in depth explainer of these responsibilities, visit our Board Membership 101 blog series.
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