Website or Blog - Daddy or Chips?
July 11, 2008
A long time ago, McCain posed this question which still reverberates in the minds of us old enough to remember it - and young enough to have been worried by it.
Now there’s a new question … website or blog?
Like Daddy or Chips, the question is unanswerable, because you may be able to have both. In fact, you almost certainly should have both, if you can.
Occasionally I’m asked what the difference is between a website and a blog – and usually the starting point for the answer is straightforward:
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Rating The Corporate Governance Raters
July 8, 2008
Corporate governance attracts much public attention since it purportedly involves the economic-financial health of corporations and society in general. However, corporate governance is poorly defined because it typically is composed of differing mix of policies, procedures, internal practices all surrounded by laws and regulations.
Simply put -
…the overall purpose of corporate governance, which is to align as nearly as possible the interests of individuals, corporations and society.
Theories of Corporate Governance Edited by Thomas Clarke
OK maybe that’s too simple. Here is a definition from Investopidia –
“Good corporate governance is a situation in which a company complies with all of its governance policies and applicable government regulations (such as the Sarbanes-Oxley Act of 2002) in order to look out for the interests of the company’s investors and other stakeholders.
The corporate need to be in compliance with corporate governance has shaped an industry of advisers, rating firms and other services with an estimated 2008 sales of $52 billion (corp-integrity.com). Perhaps the most influential of these companies are the rating agencies. These firms - which include the Corporate Library and RiskMetrics Group’s ISS Governance Services and S&P - analyze companies against their own criteria and rate whether a company is well governed or not.
These ratings may influence a company’s cost of capital, equity share price and shareowner relations. As such, the companies that compile these ratings have achieved a significant presence in world financial markets. But, there are some problems — extensive studies indicate these ratings bear little relation to actual corporate performance. A recent Fortune article summarized a Stanford University study widely different ratings for individual companies.
The Stanford researchers summarized their findings–
We examine these claims for the commercial corporate governance ratings produced
for 2005 by Audit Integrity, RiskMetrics (previously Institutional Shareholder Services),
GovernanceMetrics International, and The Corporate Library. Our results indicate that the level of predictive validity for these ratings are well below the threshold necessary to support the bold claims made for them by these commercial firms.(Emphasis added) Moreover, we find no relation between the governance ratings provided by RiskMetrics with either their voting recommendations or the actual votes by shareholders on proxy proposals.
Rating the Ratings: How Good Are Commercial Governance Ratings? Rock Center for Corporate Governance Stanford University
A summary of this report is available. The Stanford study is one of a number of other similar studies that question the value of these ratings agencies. Some common themes in these studies include –
- Over reliance on quantitative accounting/financial criteria
- “You can’t legislate compliance”
- More emphasis needed on observable qualitative criteria, such as corporate culture, drivers of employee behavior and corporate integrity practices.
This post only touches the surface of this important subject. Future posts will cover additional aspects of Corporate Governance ratings and related topics. In the meantime, here is a Canadian company that just might be a model of effective Corporate Governance practices –
Note the focus on Integrity, the public display of an “Integrity Hotline” and a clear display of compliance documents. Criteria the rating agencies miss.
The Evolving Corporate Demographics
July 2, 2008
The terms Boomers, Generation X, Generation Y and now the Millennials have become part of the business lexicon. The mix of these four generations in the workplace will continue to have profound corporate implications.
Here is how the four generational groups are typically defined –
- Silent Generation (individuals born between 1925-1942)
- Baby Boomer Generation (individuals born between 1943-1960) 78 million
- Generation X (individuals born between 1961-1976) 37 million
- Generation Y (Echo Boomers 1977) (Millennials 1982) individuals born between 1977-Now 80 million
What’s On The Minds Of CEOs (Part 1)
June 24, 2008
I must admit, I have a strange hobby. I like to collect surveys of CEOs. But there is a benefit, I learn what issues CEOs say they are confronting. Now I would like to share some learnings from my hobby.
I will present summary results from four current surveys and indicate where you may obtain copies of the full surveys. Finally I will discuss items common in the surveys. Because of the length of the content, there will be two parts. This post will cover surveys from IBM and Forum consulting. The second post will cover PWC’s and CCL’s surveys and will include a summary review.
- IBM’s “Global CEO Study”
- Forum Consulting’s “Growth, Talent, and the Three C’s: A Review of Global Business Trends
- PricewaterhouseCoopers’ “11th Annual Global CEO Survey”
- The Center For Creative Leadership’s “Ten Trends”
Whistling For Attention
June 20, 2008
Somewhere around the time British Rail was privatised there was a wonderful quote from one of the presiding ministers: “Only 90% of passenger trains reach an eventual destination”.
Ever since then I’ve been deeply concerned about the remaining 10%. Are they lost out there somewhere, haunted by howling commuters, doomed forever to search for the Shangri-La of an “eventual destination”?
As well as showing how important it is for our leaders to think before speaking, this tale also demonstrates the inherent danger in relying upon statistics to prove a point.
So here’s another equally dubious one: less than 2% of UK companies encourage employees to raise their concerns if they believe their employer is breaking the law.
The rest, by definition, are either happy for such employees to approach the media, or are certain their employees will simply stay schtum.
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