Question

How can the "Corporate Governance" positively influence the executives behavior, to reduce their self interest? Does "positive psychology" really works better than strict rules and regulations? Should executives/ CEO's compensations be that high, even if the company is not performing that well?

Please answer the question in details!

Answer 1

The importance of Corporate governance in today's progressive and aggressive business environment cannot be denied.

It is crucial to achievement of a new frontier of competitive advantage and profitability.

Corporate governance is actually all about to increase to policymakers investors and other stakeholder and the way it is enacted by businesses is not always consistent. It is differ from business to business.

Corporate governance include-:

+ The Company's performance and the performance of the board.

+Relationship between board and executive management.

+Appointment and assessment of board' directors.

+Board membership and responsibilities.

+The ethical tone of company and how the company conduts itself.

+Risk management, Corporate compliance and internal controls.

+Communication between the board and the C- suite.

+Communication with the shareholders.

+ Financial reporting

This list provides a bird' s eye view of Corporate give in action and conveys the extent to which it can influence business.

So it is, built on a foundation of transparency, accountability and trust.

Therefore Corporate governance affects and dictates the internal functioning and morale of the company and it also projects extremely to the public.If the company turn away from the policies of honesty and transparency, it will lose credibility and competitive advantage.

Corporate governance has value beyond demonstrating a company's social responsibility effort and overall principles rather than executive' s self interest.

2nd

Positive psychology is the scientific study of the "good life" or the positive aspects of the human experience that make life worth living. The discipline of positive psychology focuses on both individual and societal well being.

Whereas Strict rules and regulations seems like burden. Individuals don't accept it freely and directs it mental illness, maladaptive behaviour and negative thinking.

We take one simple example-:

Richard joins a company enthusiastically. From the first day his manager started to tell him " this- that rule'. It is very natural, he would get frustrated very soon.

Now second situation, if manager treat him very friendly and helps and guides him in his work. This situation will create positivity in him.

3rd

It is known to everyone business executive make more money than lower level employees.

This pay disparity between CEOs and average employees is unfair and results may be unhappy workers. Due to this performance can be deteriorated and companies' performance will also affected.

CEO' s job is to enhance company's performance and make it financially strong but if company is not well performing for what reason CEOs should be paid higher.