Modern society utilizes various corporate entities such as companies, clubs, cooperatives, institutions, societies, trusts, and more.

All these entities need to be managed and governed.

Purpose of Corporate Entities

Entities are formed to meet a specific need or purpose to serve its members.

Examples: A company generates value for shareholders, a club provides recreational facilities for members.

The Constitution

Every corporate entity requires a constitution.

The constitution defines an entity's name, objectives, member rights/duties, governing body, and finances.

Without a constitution, a group is not a true corporate entity.

Examples:

• Limited liability Company: Memorandum and articles of association

• Partnership: Partnership agreement

• Chartered professional institution: Formal charter

• Club: set of rules

The Legal Context

Corporate entities are bound by laws of the jurisdiction they operate in.

Different types of entities have different governing laws.

Those governing must be aware of the legal context to seek appropriate advice.

Defining Corporate Governance

Some definitions focus on direction and control of companies.

A broader view: Corporate governance is about the exercise of power over a corporate entity and its accountability.

Governance ensures corporate performance and compliance.

The Members

Corporate entities are established for their members.

Members' rights and duties are anchored in the entity's constitution.

There are various types of members depending on the corporate entity.

The members are the root of corporate governance power.

The Governing Body

Every corporate entity needs a governing body (e.g., board of directors, committee, council).

Members of these governing bodies may have different titles.

The governing body is 'the board' and its members are the 'directors'.

Governance and Management

Management involves decision-making and leadership to achieve results.

Corporate governance oversees management to ensure proper direction and management.

Management structures are hierarchical, while board structures are not.

Board Structures

A board can be visualized as a circle, indicating all directors have equal power.

Distinction between executive directors (part of management) and non-executive directors.

Various board structures exist based on the mix of executive and non-executive directors.

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Reference: The Practice of Corporate Governance by Bob Tricker

The expectations from managers are complicated and confusing. Managers are asked to be global and local; collaborate and compete; change and maintain order. How is anyone supposed to reconcile all this?

To integrate these seemingly contradictory concerns managers need to focus on what they need to accomplish and how they have to think.

If poorly executed, businesses may:

• Know how to execute but fail to reflect on their situations. They react to every stimulus, but sloppily, and have to be constantly fixing things.

• Overthink but can’t get things done fast enough. They’re bureaucracies that are great at planning but slow to respond to the market.

• Suffer from both of the above afflictions across their departments. E.g. Sales department chases every possible deal while the marketing department is absorbed in grand positioning statements.

In its essence, management involves five perspectives:

1. Managing self: the reflective mindset

2. Managing organizations: the analytic mindset

3. Managing context: the worldly mindset

4. Managing relationships: the collaborative mindset

5. Managing change: the action mindset

Everything that every effective manager does is sandwiched between action in the ground and reflection in the abstract. Action without reflection is thoughtless; reflection without action is passive. Management follows a logic that systematically breaks down activities (analytic), involves a network of people and relationships (collaborative), and takes the context of the world around the organization (worldly).

Beware that obsessing on a mindset can make it a mine site that’ll blow up in your face!

Managing self: the reflective mindset

Managers need to step back and reflect thoughtfully on the events around them. Events become experiences only when we reflect upon them and relate them to general patterns. Unless the meaning is understood managing is mindless. Appreciate the past if you wish to use the present to get to a better future.

Managing organizations: the analytic mindset

You simply can’t get organized without analysis. Analysis loosens up complex phenomena by breaking them into separate components. It doesn’t seek to simplify complex decisions, but to sustain the complexity while maintaining the organization’s ability to take action. Analysis gives an insight into the driving forces -the why- behind peoples’ actions and provides measures of performance.

Too much conventional analysis is harmful. Remember the tennis player who watches the scoreboard while missing the ball - it’s just like the marketer who studies the crowd while missing the sale.

Managing context: the worldly mindset

Being worldly and global are two different things. Globalization sees the world from a distance - it assumes and encourages homogeneity of behavior. The culture is rooted in the culture of a headquarters’ country. In contrast, being worldly encourages seeing differently to reflect according to the context. There are plenty of worldviews and the local impact and consequences are indicators of performance.

Think about this. An American tourist in India asked her driver: “How can you possibly drive in this chaotic traffic?”

“I just join the flow” he replied.

Is it chaos or just a different kind of logic?

Our worlds are interdependent, similar yet different at the same time. We need to get out of the office and spend time where products are produced, customers served and the environment is impacted.

Managing relationships: the collaborative mindset

Managing is about working with people - not just as bosses and subordinates, but more importantly as colleagues and partners. The collaborative mindset promotes an engaging style of management, as opposed to the heroic self-based management style.

Heroic managers separate themselves from the workers and developers. The higher up they go, the more important and valuable they are. Decisions and strategies come down the hierarchy. The chief decides and everyone implements. Here implementation becomes the problem because while the chief embraces change, most others resist it. What matters is shareholder value, and leaders reap the rewards when they attain them. In this model, leadership is thrust upon those who thrust their will upon others.

This is in contrast to engaging leaders who listen more than they talk, and allow people greater control over their own work. Leadership here is in the background. In the engaging management model, the importance of managers relates to their ability to inspire and engage their team to excel and deliver. An organization here is a network, not a vertical hierarchy. Leaders work at every level and not only on top, so the strategies and solutions emerge from within the network. In this model, the implementation may face some friction because the line between the problem and the solution is blurred. This style of management rewards everyone for making the organization a better place. Leadership here is a sacred trust earned through the respect of others.

This mindset involves managing relationships more than managing people.

Heroic leaders: “I deem, so that you do.”

Engaging leaders: “We dream, so that we do.”

The engaging style is essentially leadership in the background.

Managing change: the action mindset

Effective leadership is not just about having a vision or strategy, but also about taking action to bring that vision to life. Philosophers have used a powerful metaphor to describe the challenge of leading an organization: a chariot pulled by wild horses, with those horses representing the emotions, aspirations, and motives of everyone involved. Successful leaders harness the emotional energy, aspirations, and motives of their team, and maintain awareness of the terrain they’re navigating to steer the organization in the right direction.

Maintaining a steady course while also being flexible enough to adapt to changing circumstances is crucial. Without continuity, change cannot be managed effectively. To achieve your goals, it's essential to blend action and reflection into a natural flow. Taking action means remaining curious, alert, and experimental, recognizing that change is a learning process, and maintaining course is too.

In conclusion, effective management is an art that requires weaving together different mindsets in a balanced way. It is important to recognize that different managers may have their own inclinations toward certain mindsets which can affect their performance as managers. By being aware of these tendencies and actively seeking to balance them out managers can create a more well-rounded approach to leadership and ultimately drive their organization toward success.

This post is my summary of ‘The Five Minds of a Manager’ by Jonathan Gosling and Henry Mintzberg.

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