Corporate Governance and Organizational Structure Essay

The process of choosing a new member of the board of directors in an organization whenever an incumbent one is leaving a particular office is a tricky task that requires great care and insight. It is important for leadership to change from one person to another after the agreed term of service expires or due to some other circumstances that crop up, which makes it necessary to have a person chosen to lead in particular docket.

For instance, a certain member of the board might pass on, and therefore creating a vacancy that ought to be filled. Another instance that can emerge to make it necessary to select another member due to a vacancy in the board is when a member leaves the office due to other personal reasons. In all these cases, it becomes compulsory to select a new member to fill in the available opportunity.

There is a wide range of potential candidates who can be selected to fill in the vacant space. This person can either be from within the organization or from outside the company. At the same time this person can be one of the board members, a top leader in the company, an outsider who has some affiliation with the organization, but does not have any involvement in the company, and lastly, there can be an outsider who got no connection with the company.

Members who have affiliations with the organization are likely to be slow in generating new and innovative measures of development for the corporation. Probable developments must have taken place in their presence and therefore their means to creativity are limited by the presence in that corporation if compared with outsiders.

Having been associated and having worked in the corporation lets one likely think that growth and development policies have probably been exhausted, even when that is not the case. The ability for an insider to pursue innovative processes for the corporation is therefore slow or limited to some extent.

Another aspect of an insider that may not be favorable for the corporation is the emulation of previous management by the insider once appointed, even when that management was not effective or efficient in its leadership.

The newly appointed member may continue to uphold the leadership qualities that were used before and this may result to ineffective operations, even when such changes of management is meant to achieve management change for the organization. Failure to move the corporation forward proves the entire process ineffective because such changes should be tailored towards the forward movement of the corporation (Gup 180).

New challenges are the mother of innovations, and this is not different in corporation management. Having an outsider in the management of a corporation brings in new ideas that were not present before. Generation of new management systems is also likely to take place.

This is because the outsider has no interactions with the corporation, and the basic fundamental role of managing a corporation is to oversee its success in its particular line of production. What this means is that an outsider will give the corporation a chance to grow at a faster rate than it would have been the case if an insider. This is due to the diverse creativity and innovative procedures that the outsider might have at hand, given that he or she is not an affiliate of the corporation (Hirschey, John, and Makhija 140).

Likewise, operations of any corporation are essential to the success of that corporation. The operation potential of corporation determines the level of revenues that the corporation is likely to generate. Consequently, the revenues that the corporation generates determine the profitability of the firm.

The long term plans of the corporation are solely based on the operations ability of the corporation in the long run. These plans are therefore key factors to consider in the line of management, so that the effectiveness of the management is as well brought into focus. An outside member of the management panel can pursue such policies with broad and diverse reasoning that an insider may be limited to generate (Gup 200).

In essence, the management panel should be in a position to understand that the corporation is there to make better achievements. Therefore, the management should as well welcome an insider or an outsider in the management board.

The issue in managing corporations is not who does what and where he or she is from, but it is all about making the corporation better in its overall welfare. Conflicts of interest are therefore not expected, and it is the responsibility of the entire management team to work together in accordance to the codes of ethics that govern the corporation (Hirschey, John, Makhija 150).

Works Cited

Gup, Benton. Corporate Governance in Banking: A Global Perspective. California: Edward Elgar Publishing, 2007. Print.

Hirschey, Mark, John Kose, and Makhija Anil. Corporate Governance and Finance
Volume 8 of Advances in Financial Economics. Elsevier Book Series on Science Direct, Chicago: Emerald Group Publishing, 2003. Print.

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