Abstract
The goal of this study is essentially twofold. First, it seeks to improve the efficiency of management in Russian companiesthrough a revitalisation of perspectives on the makeup and activity of boards of directors. Second, it seeks to develop amotivation among controlling shareholders to strengthen the actual role of such boards in managing companies. Thiscombined approach is intended to be applicable to both public and private companies.The objective of this study is to search for ways to refocus on standard recommendations for international best practiceregarding the work of boards of directors. These recommendations should consider best practices in terms of generalcompany control and supervision, the in-depth study of key business processes, management innovations, technologies,and tools to promote new management approaches. A feature of this investigation will be the identification of ideas toensure the best paths towards overcoming psychological barriers that impede the adoption of innovative and novel ideasby management.This article provides a comparative analysis of the classic Anglo-US model of corporate governance (which features therole of boards of directors as the body exercising control and supervision over the company’s activities and its management), with the Russian model. The Russian model is characterised by a structure which nominally replicates thepractice of developed countries, whereby the real power rests with the controlling shareholders and management, withthe boards playing a secondary role by approving the plans of the company activities and their results.Given this situation, the boards of directors of Russian companies should prove their capability to contribute to thecreation of economic value. Examples of essential management areas in which boards of directors should implement thefunction of management development are: strategic planning, creating and improving competitiveness, building up anddeveloping the company’s human capital, risk management, and internal control. This article suggests efficient practicesand tools which can be used by a board of directors for management development.
Highlights
In the present-day context, business process management has globalised
Real power rests with the controlling shareholders and management, while the boards play a mostly secondary role, considering and officially approving the plans of the company activities and the results of their implementation
Board members and management can focus their attention on regular discussion of these issues and jointly search for answers to the following questions: What economic value for the company does the work of HR units create, and how is it measured? In which areas should the HR units make the greatest contribution to achieve the company’s strategic goals within the approved strategy? To what extent is the performance assessment, and the motivation principles of the HR team vis-a-vis business objectives, approved as part of company strategy? To what extent is the head of the HR units involved in the most important management decisions of the company? Does management find this involvement to be optimal?
Summary
In the present-day context, business process management has globalised. The format and processes relating to official company documentation which stipulate the functions of management bodies, and the legal norms governing such activities, have become increasingly unified. In the author’s view, the most important areas of management in which the boards of directors of Russian companies should implement this function are as follows: strategic planning, ensuring and improving competitiveness, building up and developing the company’s human capital, risk management, and internal control. In the author’s view, the idea of increasing the contribution of the board of directors to the development of large companies through the implementation of the “Business Council” model is unpromising This term refers to a practice whereby the board members themselves propose specific business ideas and projects, effectively influences their implementation, and features their involvement in the project management processes [2]. Board members and management can focus their attention on regular discussion of these issues and jointly search for answers to the following questions: What economic value for the company does the work of HR units create, and how is it measured? In which areas should the HR units make the greatest contribution to achieve the company’s strategic goals within the approved strategy? To what extent is the performance assessment, and the motivation principles of the HR team vis-a-vis business objectives, approved as part of company strategy? To what extent is the head of the HR units involved in the most important management decisions of the company? Does management find this involvement to be optimal?
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Schedule a callMore From: Journal of Corporate Finance Research / Корпоративные Финансы | ISSN: 2073-0438
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