The term “Corporate Governance” has become synonymous with “management,” reflecting the importance of the governing processes in management. Therefore, any discussion on corporate governance must begin with a discussion of management. In practice, this means distinguishing between two types of management philosophies—corporate control and empowerment—and their associated corporate governance systems.A company governed by corporate control ideology will have top-down decision-making processes that favor its shareholders over other stakeholders. Conversely, an empowered organization will have a shared vision among stakeholders and will promote their success through transparent decision-making processes and regular shareholder meetings. The success of each system depends on its ability to support an effective leadership structure and foster the growth and development of key stakeholders in line with corporate strategy.The most basic element of any organizational structure is leadership— who directs the company and determines goals and objectives. Instilling strategic direction requires both leadership skills and internal stakeholders who believe in the company’s goals.In addition to external stakeholders such as shareholders or employees, every organization has internal stakeholders such as board members or department managers who influence how leaders allocate resources within the organization.Roles can vary depending on whether the organization is governed by empowered or corporate control ideology— for instance, a shareholder may have more power than one without stock holdings in an empowered firm. Regardless of ideology, all companies must have clear leadership guidelines that establish roles for all stakeholders within the organization’s guidelines for effective corporate governance.
