Good governance, bad governance, effective governance

The Hague, The Netherlands, 20121024 Re: Abstract of dissertation proposal on effective governance Dear reader, Thank you for your willingness and time reading these contemplations that should lead to a solid proposal for a dissertation. The following document is only a current abstract, designed to collect comment and provoke discourse, you are invited to put them forward. For the investigation should be a composition of sturdy opinions on the effectiveness of governance. Sincerely, Huib de Jong T. +31 651 295145 Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.1 of 9 Proposal for PhD. Dissertation - ABSTRACT - GOOD GOVERNANCE, BAD GOVERNANCE1 Purpose of this document is to acquire endorsement and patronage to investigate the question of effective governance; to mitigate the notorious agency conflict, reduce losses and assure continuity of the organization. 1 Pietro E. Ambrogio Lorenzetti (1290 – 1348), painter of the remarkable fresco series that lines three walls of the room in the Palazzo Pubblico where Siena's chief magistrates, the Nine, held their meetings (Sala dei Nove). He was apparently called upon to paint allegorical depictions of good and bad government to represent the effects such regimes would have in the town and the country. Being a Renaissance man, he must have been inspired by Plato’s work ‘The Republic’. It already contained a maturity model for governance; ‘the 5 regimes’. Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.2 of 9 Keywords Governance, culture, effectiveness, countervailing2, nomination, remuneration, supervisors, corporate citizenship, the Board. Summary This dissertation on effective governance seeks to distribute knowledge, in the form of best practices applicable by effective governance.It should act as guideline for the author who seeks the role of competent, independent outside director. Problem statement Debates on two tier versus one tier Boards, are rife on the European continent. Advocates of the two tier model are adamant about separating powers according to the lines of ‘Trias Politica’ and the likes. On the other hand the advocates of the one tier model dismiss the discussion by focusing on the effectiveness of the organization and illustrating that the two tier maintains an expensive and irrelevant corps of lackeys. I’m grateful for the dissertation by Dr. Calkoen who completed a comparative study of these Board structures in 2011; it has turned a cornerstone of this research into the foundation on which I can construct a major section of my thesis. 2 Encarta Dictionary, 2011, to exert a counteracting power or influence against something, especially against a harmful force, idea, or influence Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.3 of 9 Objective The research for this dissertation serves two purposes:  At first; to compile evidence that outside directors are overlooked as a realistic resources for strategy development3 to optimize value in and of the organization.  And secondly; to develop products ranging from a maturity model to –ideally- a theory to facilitate the optimization of the organization. Research Methodology Evidence is only valid if observations are corroborated and this investigation documents several dimensions like: consulted literature and other scientific studies, empirical field research, case studies and own experience. Research type The author has decided for qualitative research. His aim is to assemble in-depth information on elements like: vision, motivation, conduct & behaviour, drivers for nomination, remuneration, corporate ethos etc. All in an effort to develop or ground a theory that will equip the outside directors to take up a more robust role in the longevity of the organization. 3 Calkoen 2011 Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.4 of 9 Research direction The research direction depicts in broad steps the increasing impact on an organization’s effectiveness by subsequent activities and roles. Enhancing monitoring & assessment for effective governance INTERNAL AUDIT ACTIVITY AUDIT COMMITTEE INDEPENDENT DIRECTORS THE BOARD Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.5 of 9 Research design The overview used is constructed conform Messrs. Verschuren en Doodewaard as published in their second edition [2010]of ‘Designing a Research Project’4. Research design Iterative proces, using previous results as input for next activity Conceptual design Research objective Project context > demarcation > reseacrch objective Tools Research framework Broad sketch how to achieve research objective Theoretical framework Description + exact definition of key concepts => further delineation of research objective Research questions & conceptual model Formulation of questions whose answers provide info to achieve research objective Root Cause Analysis Definitions & operations Technical design Decisions Research strategy COSO ERM Cobit 5.1 P3M3 Research material Define research population, resources Mental image/artist's impression of final product Research planning Timelines + deliverables Conceptual model Qualitative, exploratory Generic Abstract 4 Designing a research project / Piet Verschuren and Hans Doorewaard ; [transl. from Dutch by R. Poper] Authors: Petrus Johannus Maria Verschuren (1944-); Hans Doorewaard (1948-) Medewerker: R.L. Poper; Michelle Mellion (1956-) Year: cop. 2010 Edition: 2nd ed. / [rev. and ed. by M.J. Mellion] Publisher: The Hague : Eleven International Publishing Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.6 of 9 Analysis For diagnosis of the causes for failing governance, the major approach followed, is the root cause analysis method for it will also reveal the hierarchy of the systemic failures. The root cause is often a failed control, process, or a gap in staff skill sets that caused an earlier condition or event. This earlier event sets off a series of causes and effects leading to the proximate causes. In the figure below, the root cause condition or activity occurred at an event, well before the proximate cause. The best way to prevent recurrence is to change what happened at that event. In other words, making changes to processes or conditions like behavioral patterns, early in the chain of events is usually better than managing proximate causes. Since the disorder or dysfunctionality lay in several areas and subsequently the improvements as well. To control processes, enterprise risk management provides a platform that has proven its worth in embedding continuous risk control and mitigation, for example in attesting operational effectiveness, including regulatory compliance with, for instance the Sarbanes Oxley Act 2002 or Solvency II. In the end, diagnosis of the events at the roots can lead to the analysis of behavioral patterns in the response, unveiling the underlying systemic structures causing such behavior and repair it, lifting the organization to the next evolutionairy level5 or era. 5 Inspired by Senge P,. 1994. The Fith Disicipline. P. 52-53 Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.7 of 9 Result This investigation should deliver a review of the factors that aid the development of good governance6. And result in transmittal of a best practices framework that is adaptive to influences in society and can be used as a navigational tool to reach goals set by the organization and ensure the organization’s sustainability because of its reliable reputation, as directed by an effective Board reducing the notorious agency conflict7 and enhancing uniformity for information exchange around the world [i.c. Standard Business Reporting]. Effectiveness This quest of effectiveness should result in an organization’s ability to demonstrate operational effectiveness to third party audits; let it be the IRS, SEC, consumer watchdogs or the external auditor. If management is in control, its operation will be effective in safeguarding their market position by it’s strategic decisions, revealing the organization’s intrinsic value, it’s compliance with rules and regulations will make it fit well into the environment. This operational effectiveness is for organizations what Darwin’s law of nature is for organisms: “survival of the fittest”. 6 Based on ERM framework that is suiteble for review conform Public Company Accounting Oversight Board Auditing Stsndard N0.5 [AS No. 5.5] for efficiency in public reporting and efectiveness of governance and operations. 7 Term preferred by author for what is know in political science and economy as the ‘principal-agent problem’ because author is convinced that the principle problem is not the agent but the contract and structure between principal and agent. Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.8 of 9 Time table Date Subject 2012Q4 Completion exploration 2013Q2 Completion analysis 2014Q3 Completion evaluation 2015Q3 Improvement; recommendations, assurance against plagiarism, and initial publication Iterative monitoring After inititial publication, periodic publication is intended and the result of an iterative process of assessing and improving performance of Board and organization that over time will development into effective governance and organizational performance. Stage 1: 2011-2012 Stage 2: 2013-2014 Publication 2015 Desk research Establishment Research Objective Survey Case study Grounding theory dev't One Tier Board effective governance COSO II/ERM P3M3 Cobit 5 corp.gov - mngt ctrl Two Tier Board effective governance IST of ERM Maturity Improvement Gap Analysis Additional Good Practice IST of ERM Maturity Improvement Evaluation Recommendations Academic Publication Evaluation Proposal for PhD dissertation - Abstract v012 - date 20121024 by H. de Jong T. +31 651 295145 p.9 of 9