By Cornelis A. de Kluyver
Business Expert Press, 2009
In traditional MBA programs, formal training in corporate governance, including the function of the board of directors, is often brief, inconsistent, or entirely nonexistent. In this book, Cornelis A. de Kluyver of the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University provides students and practitioners of management the opportunity to fill this void.
A primer (pronounced “prih-mer”) is an introductory book that provides a concise and relevant understanding of a given subject. In the case of corporate governance, a wide literature already supports the study. De Kluyver’s contribution is unique as the text serves not only as an introduction; it also reaches deep into the multifaceted environment associated with running corporations at the board and CEO levels. He also engages the reader with the historical, critical, and practical tools necessary to effectively manage firms today and in the decade ahead. In addition, he provides an appendix on Sarbanes-Oxley and other regulatory reforms as well as a practical set of questions for the board and best practices for enterprise risk management.
At the center of this book is an enduring intellectual debate: What is a corporation’s purpose and who does a corporation serve? De Kluyver reminds us that corporations are not only sources of profits for owners, but also where employees spend their lives in pursuit of higher standards of living.
With corporations at the epicenter of institutional power in the global society, A Primer on Corporate Governance explains why their governance is imperative to social, political, and economic wellbeing. To forget the egregious corporate malpractice of the late 1990s and early 2000s not to mention the more recent economic crisis that many believe is the result of poor governance is merely fuel for another decade of economic turmoil. De Kluyver lays the foundation for reconnecting with the philosophy of governance, how to design it, and most importantly, how to manage it. This book is essential reading for students, but should also be required reading for practitioners new and seasoned to ensure they understand the daunting tasks and decision-making power of boards and CEOs.
Organized in three parts, A Primer on Corporate Governance introduces the system of corporate governance as “the system that defines the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders, and other stakeholders, and spells out the rules and procedures for making decisions of corporate affairs.”
The reason students receive little or no training on boards of directors is because few people, other than senior management, sit on boards, engage with directors, or consult boards’ committees. Nevertheless, it is the responsibility of stakeholders to hold boards accountable, and so, the second part of the book explains a board’s responsibilities, including CEO selection and succession, CEO performance evaluation, executive compensation, strategy development, risk management, and compliance.
The final section provides insight on the reality of globalization. As corporations converge with global governance practices, future managers will be required to have a stronger sense of worldwide commerce, cultural diversity, and economic and political risks, De Kluyver writes.
A Primer on Corporate Governance can help students, teachers, and practitioners at all levels understand the nature of the corporation, how to strengthen its long-term competitiveness, and most importantly, how its governance not only sets a corporate culture’s tone, but also makes it a worthy investment, an attractive place of employment, and a service to society. (Editor’s Note: For further insight into the world of corporate governance, listen or read: “Corporate Governance, SOX, and the Business Judgment Rule,” an interview with CEO coach John Rehfeld.