Fruits of ineffective Corporate Governance

Board leadership blueprint should be created in the spirit of sustainable business practices, good performance, competence, effective governance operating model, leading ethics and leading ethically. With this in mind the organisational?purpose is set and the guiding system of rules, policies, and practices used to help in decision making,?direct and control a business and is essential to its sustainability and success are crafted. They are formed to help the entity orchestrate responsible leadership marked effective accountability mechanisms. Within it” – the Owners/ shareholders governance roles are defined, the Governing body duties clarified and the top management and the employee’s accountabilities set and overseen. For effectiveness, the Governing body need to ensure they remain competent, disciplined, transparent, independent, accountable for their actions, responsible, and fair with the understanding that the back stope with the Board.

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Without effective governance, financial disasters are prone to happen like has been the many cases in the last two decades. Billions of dollars has been lost as a result of these disasters, wiping of companies from face or earth and ruined peoples’ lives. This mainly due to passive board leadership and excessive greed of a few executives that led to disastrous consequences affecting millions of people i.e. WorldCom, ENRON, where the board of directors failed to govern right.

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For WorldCom ($3.8 billion of fraudulent balance sheet entries , overstated assets by a staggering $11 billion, 17,000 jobs lost, the Road to disaster started with a passive board of directors followed by Risky strategy and bad implementation set stage for failure.

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For, Enron's Scandal (4,500 Job loss and $74 billion loss caused by fraudulent reckless use of derivatives and special purpose entities) the Board failed to fulfil its fiduciary duties towards shareholders. Two executives, Kenneth Lay and Jeffrey Skilling were convicted of fraud.

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Poor Board Oversight failed to prevent scandals involving the likes of WorldCom and ENRON. Noticeably, when good corporate governance practices?is abandoned, shareholders can be hurt immeasurably, a company runs the risk of collapse, and stakeholder including employees, suppliers, tax collectors?stand to suffer substantially.