The top level of the pyramid in business management is called senior management. It contains some bodies and senior management structures. The board, president, vice president, and CEO are examples of top executives. These managers are responsible for controlling and supervising the whole organization. They develop goals, strategic plans, company policies, and make decisions regarding the direction of the business. In addition, senior managers play an important role in mobilizing external resources.
Manage your business by Prosoftly
You can use Prosoftly Business Management Software to manage your business more effectively.
Corporate governance is the name given to all of the management principles of an institution/company/enterprise that establish and operate the structures and mechanisms. These structures and mechanisms protect the interests of the stakeholders and create a sustainable balance against each other in a sustainable structure.
Which Structures Should Be Considered When Senior Management is Mentioned?
When it comes to senior management in companies, it is generally understood that the highest body of the company is the general assembly. Then respectively; Board of Directors, committees, executive board, general directorate / chief executive officer / CEO / executive director, C level (the most responsible person in a department) / vice general manager/ director.
There is no one-size-fits-all recipe. If there was only one truth, that line would already have spread and every company would have a perfect structure. It should develop personalized "drugs" for everyone. Albert Solino Consulting also develops personalized medicines specific to each company for senior management to treat themselves.
Corporate governance brings critical concepts to the fore;
Stakeholders: There are shareholders, partners, suppliers, customers, members of the board of directors, board members who are shareholders, and independent board members who officially hope to benefit from the company. Where there are different interests, it is very possible to have a conflict of interest. For example; There is a family business and there are 2 shareholders in this company. The two brothers are partners. They have children. All of them have different interests. When there is a differentiation, if corporate governance is not dominant in the company, serious frictions may occur. Frictions can cause disastrous problems because the concept of partnership is damaged. Today, companies can crumble and disappear despite making a profit. When this happens, corporate governance and principles come into play. If a company;
- mechanisms can be established that protect the rights of stakeholders and balance them against each other,
- can provide transparency and fair management,
- can enable the company to create value in a sustainable way and
- can focus on issues that will create efficiency, corporate governance will be realized
What are the Corporate Governance Principles in Senior Management Structures?
Corporate governance principles consist of 4 main headings;
- Fairness: It is necessary to act fairly while performing a job within the business. Companies have to be fair. Justice means doing a job properly. If a job is not done properly, justice would be dismissed. Providing fair management is the basis of corporate governance. When trying to behave fairly, they can sometimes be against the interests. For example; There is a family business. A family member who is a shareholder does not work properly in the company. He wants to earn the same or higher salary as an experienced employee. If corporate governance is desired to prevail in our company, the concept of fairness should be put into practice. By conducting family business constitution studies, it is necessary to determine the conditions, what, when and under what conditions in the corporate governance and family relations structures of the company, both for family members and for senior managers and professionals in the company. Sometimes, in order not to lose a job, even though two employees have the same profile and level of success, a raise can be given to one of the people. If another employee, who does the same job, does not request a raise, the salary remains at the same level. At this point, unfairness arises. For this reason, employees can lose motivation and performance. Employees who lose hope about their future in the company may leave there. It is necessary to take fairness as a principle before things become negative. The most fundamental concept of business and economy is justice and it is one of the principles of corporate governance.
- Transparency: Today, digital transformation has become very important as it envelops companies like a hurricane. There is a law such as "Technology doubles itself every 2 years.", now changes have occurred in this law. Technology can now renew itself within 6-7 months. According to a study, the total number of data produced worldwide in the last ten years is equal to the sum of the data produced by human history until 2010. If there is no transparency when there is dense data, when that data is behind the curtain and mask, people start to have anxiety, fear, and uncertainty. If the information fog is not removed, people and institutions experiencing negative thoughts start to stand against the company and cut off their relations. Transparency is essential. There will be confidential information of the company, of course, but there should be no problems with storing, manipulating, transmitting information other than the requested information, or not delivering any information. Today, some companies keep their balance sheets in some businesses that want to take credit. They do it to appear more profitable and successful to open higher credit opportunities. It may seem like a profitable way at first, but when transparency is not provided, the bank surely discovers this privacy. Trust is the pillar that keeps companies alive. When trust is broken, everyone looks at the company with question marks. Until today, many companies have experienced the negative effects of being far from transparent.
- Accountability: Accountability is a complex concept that has different connotations in different people and can be expanded in scope. Today, it is also referred to as "accountability", "accounting obligation" or "accounting responsibility". The CEO must be ready to account for the next level within a defined hierarchical structure, even if it is the board of directors or executive board. It goes hand in hand with transparency. The responsibility for the work done should be taken and accounted for. It is necessary to give a detailed account of the purpose, criteria, targets, expenditures, investments, decisions, results, causes, and solutions. Accountability should be taken into account where corporate governance needs to be implemented. No one has the intention of giving an account, especially a family-owned company in developing countries. Employees in the company may not want to be accountable by moving away from the stakeholder logic. If not, they lay dynamite at the foundation of the company in a figurative sense. Of course, there should be certain freedoms. Accountability may be possible by designing the family constitution, corporate constitution, corporate governance principles implementation project, and designing an empowerment matrix. It is necessary to determine in advance which employee can do which work of his own decision. Companies that perform accountability correctly continue to grow rapidly.
- Responsibility: Responsibility; is the feeling of doing a job that an individual has undertaken or given as a task to the end at any cost, and claiming the consequences of these actions when necessary. It is necessary to act responsibly. Everyone should have structures that are defined by pre-determined workflows and processes, whose job definitions are clarified, and whose goals and responsibilities are defined. Those who do the job must also comply. Some companies in some developing countries may not assign duties and responsibilities to employees. For example; an X employee has a job Y but has no authority over it. When a problem occurs, this X employee is asked. The authority rests with the senior management, but the responsibility lies with X. Senior management and X may not agree. In cases the authority and responsibility are not the same people, mistakes and disconnections may occur and a successful organization cannot be achieved. In another example, responsibility is never given to the employee. The father and daughters of the company are also in charge of the business. The father may not want to transfer responsibility. He wants his children to work in the company and is happy about it, but he does not give them responsibility. It does not define any responsibility or jurisdiction. Children also get cold and disconnected from work.