A New Approach to Fix Broken Governance
Pirson, Michael; Turnbull, Shann
Publisher: Estudios y Ediciones IESE
Original document: A New Approach to Fix Broken Governance
Many attempts are being made to improve corporate governance in the wake of the financial crisis. But few seem to be tackling the real issue: that our top-down paradigms, rooted in transactional, unitary, economistic notions, need to be completely rewritten in favor of a more humanistic model. Citing examples such as the John Lewis Partnership and Mondragón Corporation, the authors propose the adoption of network governance, which they say would allow for greater self-regulation, self-governance, cooperation and communication among all stakeholders. They identify the many conflicts and shortcomings of the traditional single-board system, before showing how network governance can provide a solution to these problems. By instituting a series of checks and balances, a system of having multiple boards would prevent power abuse, as well as cultivate transparency and trust. For a sustainable and truly humanistic society to flourish, the authors urge companies to do their part by changing the way corporate governance actually works.
Tools and Frameworks:
> "Reducing the Risks of Groupthink" illustrates a governance model that establishes a number of boards to create a division of powers with a rich variety of competing information.
> "The Compound Board Example" uses the example of Mondragón Corporation to show one possible way of spreading decision making across different types of boards, each with different functions.
Visa International, Raiffeisen Bank, Mondragón Corporation, International Red Cross, Barings Bank, Société Générale, Hewlett-Packard, Shell, Electrical Safety Authority, John Lewis Partnership
Based on extensive research and consultancy work the authors have done for government, non-profit and business organizations around the world.
About the Authors:
Michael Pirson is an assistant professor of Management Systems at Fordham University Graduate School of Business Administration in New York City.
Shann Turnbull is principal of the International Institute for Self-Governance in Australia.