Description
It matters to all of us that companies should be governed effectively. The prosperity of many of those associated with the company - whether directly as managers and employers, or indirectly as shareholders, suppliers, and customers - depends on it. In a broader context how companies run is a significant factor in the competitiveness of national economies as studies of Japanese management, for example, show.In a fiercely competitive world we cannot judge our own system and practices in isolation; they must bear comparison with the best. This book aims to do just that. In turn the author describes the system of corporate governance - both in the business environment, and the particular structures and practices of company organization - in five major industrial societies: Germany, Japan, France, the USA, and the UK.The book establishes two basic principles of good corporate governance: first, that management must have the freedom to drive the enterprise forward; and secondly that it must exercise this freedom within a framework of effective accountability. Charkham shows how these principles are applied in each country - indicating where methods vary, and that most countries fall short of the ideal. In addition, the author highlights the UK's strengths and weaknesses and calls for a thorough overhaul of current theory and practice.
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Corporate governance, the role played by the board of directors, has changed dramatically in recent years, as boards become more assertive in their watchdog function. In Keeping Good Company, leading authority Jonathan Charkham--whom The Financial Times of London recently dubbed "Mr. CorporateGovernance"--provides an insightful comparative study of corporate governance in five major industrial powers: Japan, Germany, France, the United Kingdom, and the United States. Charkham provides a concise survey of business practices in these five nations--the roles played by the government, the banks, the stockholders, and so forth--and evaluates the positive and negative aspects of each system of governance. For example, he points out some of the problems found inAmerican corporate governance: the information given to the board is often insufficient (at times, deliberately so); the board members are not always expert enough to see deeply into what they are being told; and board members are not always willing to exert necessary and timely influence over themanagement of the corporation. Equally important, he highlights the cultural aspects of each nation that help shape their style of corporate governance. For instance, he shows how Japanese values of "consensus," "obligation," and "family" influence business. Thus in Japan, top management makesimmense efforts to build a consensus, boards take a collegial approach, the company is viewed as a family, and leaders are rarely removed ("Only God removes a president," one Japanese said). We also read of Germany's unique two-tiered system of corporate governance in which the job of overseeing andappointing the board (Vorstand) is given to the Aufsichtsrat, a separate group of supervisors. And we learn of France's PDG (president director), a figure of almost absolute power (which Charkham suggests may be traced back to such powerful figures as Napolean or de Gaulle). Charkham points out thatthe best systems seem to be collegial in style, that contrary to the saying that the best committees are committees of one, group management is actually a more efficient way of running a large and complex operation (in Europe, some of the best companies, such as Shell and Unilever, are governed by amore collegial process). And of the five nations studied, he concludes that Germany and Japan appear to have the most efficient systems of corporate governance. Hailed as "the definitive study on comparative corporate governance" by Harvard's Jay Lorsch (author of Pawns and Potentates and an expert on America's corporate boards), Keeping Good Company brilliantly demonstrates that a sound framework for the exercise of corporate power is an economicnecessity. This book will be essential reading for all top executives, especially those working for multinational corporations.
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