DISCUSSION QUESTIONS

Q no. 01: When does a corporation need a board of directors?

 Provides a clear direction:
When a corporation is formed, it may not be based on a clear and focused vision and mission. A
corporation may have strong and valuable shareholder who is only concerned with the profit
maximization and a skilful management that is responsible for only controlling and running day
to day operations in the organization but without a clear direction the company may not go
anywhere in future. They may not be able to manage the corporation activities and retain best
shareholders within the company. To give a proper vision to the company, secure the activities
with a good mission, objectives and goals corporations need wise and capable Board of
Directors. The BOD’s set a valuable vision for the organization, clear the mission for the
existence of the organization and settle the objectives and aims for the corporation.
 Protect shareholders and make strategic plans:
Corporations need Board of Directors so that they fulfil their responsibility to protect the
interest and rights of shareholders. They evaluate the worth of the dividends payment. To run
the daily operations of organization within the budget and resources of their firm they make
strategic plans and finalize their budgets. They set some benchmarks for the measuring the level
of performance and set standard measures to control the activities in the organization. They set
a framework of duties for their employees to which management follows to run their daily
operations. If the shareholder’s rights are not protected and management is not governed by a
leading power, the BOD’s then the company formed may not be able to stabilize itself in the
market. The management without a governing body may not be able to settle the conflicts
within their daily routine matters and may not be able to take strategic decisions and actions. If
the performance level will be disappointing ultimately, they would not be able to serve their
customers in an attractive way. Without strategic management there will be no competitive
advantage and eventually the corporation will lose the valuable shareholders. So, to avoid such
a disastrous ending of a firm the sustainability of corporation lies within the hand of good
governance of Board of Directors.
 Set Policies, Rules and Regulations:
When in an organizations vision, mission, goals and objectives to be achieved are declared,
shareholders are protected and proper monitoring and controlling of activities with set plans and
standards is done another point that lighten up the reason of need for Board of Directors is to set
the basic policies, rules and regulations of the corporation. Following of rules and regulations in
the organization and setting up strong policies keeping in mind the basic objective for the
existence of organization is very important for making sure that they are strictly followed for
smooth working system of the organization. BOD’s set the rules and regulations of the
corporation so that activities can be performed by avoiding any legal inquires or issues and
without any conflicts of interest. Rules are observed in the firm to manage the issuance of
securities and smooth the inside trading. If BOD’s are not appointed in the organization there
may be some chances that organization may stuck in some legal issues as they lack in
formulating their legal policies and rules.
 Monitor the activities:
Another important issue that may lead to the need of Board of Director in the organization is
that they keep a check and authority on the CEO of the company. In the absence of BOD, the
CEO may not work properly or may not work for the benefit of the corporation. He may only
work for his own interests with in the company so BOD’s are required to monitor the activities
of CEO, provide guidelines to CEO and evaluate his overall performance in the organization.
 Grab the Opportunities:
Directors in an organization make initiatives to new opportunities and overseeing the future
resource requirements to gain competitive advantage take financial risks to earn more profits
for the growth of the organization. They determine the required budget (both operational and
capital) needed and available within the organization, strategically make plans to earn more
revenues and make approvals to monthly budgets and annual budgets.
 Ensure Reliability and Integrity:
To secure the organizations form any kind of blames of fraud or false labeling of annual
financial reports, the Board of Directors ensure the reliability and integrity of their annual
financial reports consisting of details of financial as well as operational matters. For the clean
image of their organization they keep good relations with their auditing teams to engage them
in their audits and ensure full cooperation with them while auditing their financial annual
reports.
Q no. 02: Who should and should not serve on a board of directors? What
about environmentalists or union leaders?
Board of directors
BODs are those who control and handle each activity perform in the job including budget
making, financial planning etc An annual meeting is held in which publicly/privately own
companies and representative of each shareholders group cast a vote for the member of the
BODs. The member of BODs could be inside directors ( key employees, executives members,
managers) or they could be from outside corporations
Who serve on board of directors?
This is the most important question that how to be very strategic and deliberate on who it is that
is going to serve on your company’s board.there are very key people that you need to consider
and choose when you are pulling together your board. The new and inexperienced corporation
sometime do one of the worst mistake when the make their board as they are surrounding by
people that they believe or have trust and some time these people cause corporation great
problem and hurdles in long run planning process. So corporation have to select those people
that can easily access by the corporation.Most of the people say that the member of each group
of shareholders should be the part of corporation’s board because that make easy for
management to keep an eye on the working performance and environment of the corporation.
Most of the study say that outsider should be the best choice if you want to get the positive
outcomes. The board of directors should be that person who has no personal interest in the
corporation but they are more directed to achieve company’s overall objectives and help them
to make their performance better as well as improving their decision making process.in the
Germany a study found that the labour’s represented should be the director as they are much
familiar to their environment and issues, so if he will be the director they bring some major
reforms to make their labour union more stronger.
Every corporation, business or firm required a team of top management who keep their eye on
overall company’s performance and activities. These team of top management called
BODs.every large business has a BODs but when we talk about the small business there is no
need to have these member (BODs). If someone starting any business or corporation the first
thing they do is to make an effective team that help them to make strategic vision, effective
decision making so that corporation can achieve their desire level of performance and outcomes
moreover, BODs also help the organization to satisfying the market need in which they are
assimilate.
There are some key people should be consider when corporation are looking at their board
1. Consider people who influence corporation’s community:
Consider people who can get stuff done or people who know people who can get stuff done. It
is not compulsory or necessary that only wealthy or rich people are the first priority for board’s
member. Corporation must seek that person who are influencer and who have access to people
and resources that corporation must know will be valuable for them
2. Skilled and experienced people should be consider:
Look at the people who are skilled and have experience in the type of work corporation do.
Corporation must prefer to choose that person who are very familiar with the type of work the
corporation doing. Corporation make sure that they have somebody who introducing the school
system on their board it could be the foreman from the community
3. Financial advisor or person have financial back ground:
Corporation also want someone on the board who is strong in their financial decisions and have
financial background. If you are just starting your corporation’s business you must prefer to
choose that type of person so that they can able to guide in your financial matters and make sure
that your corporation is physically and financially capable of handling resources.
Environmentalists or union leaders
Leaders
Leader is a person that has ability to make dominant decisions and able to control others.
Leader has a potential to work with groups and influence them.
Union leader.
Union leaders are those that made the meetings with the secretary of trade. These are the person
that play Important role in the strategic decision making and the main advantage of union
leaders are to coordinate with their workplace peoples. Union leaders have the power to
strength the strategic goals. They also play a significant role in when there is need of a great
change. Union leaders consider the interest of their union members and that take the action to
fulfil the needs of their union.
The union leader is in the position of providing the benefits to the union, organization and
functions in which the following are included;

• Collective bargaining: With the order of a union leader, the union collectively doing
bargain with the workplace for their work of interest or on some serious points. Collective
bargaining is the main strength of the union leader.
• Workplace safety: Some organization play important role in the training of the union of
their company. With the improve structure and safe environment of the organization, the
union leader is satisfied with the company and then the union also feel comfortable.

• Union leader ensure that the rules are fully followed in the organization. Because union
leader is in the position to follows the rules by the union members.
Example:
Nelligan O’Brien Payne LLP is a company that is provide the software that is specially design
for the union leader. By using this the union made progress for specifying their goals which is
set by the leader and help to make progress. This system also used for the information of
management, guidance of the work and for training purpose.
Environmentalist leaders.
Environmentalist leaders are those who have the ability of change the workplace by seeing the
change in thee environment. They provide the environmentally friendly products, services and
policies. Environmentalist leaders focus is on environment favour products. Environment leader
are those who see the environmental problems in the light of their experiences. They fulfil their
all responsibilities by providing the solution of the environmental problems.
The environmentalist leaders are in the position of making benefits and play the important
functions which are as follow;
• Technological skills: Environmentalist leaders are ability develop the technological skills
like to monitory the situation and work on the problems in technical ways.
• Short term and long decisions: These leaders are ability to make the short-term decisions
related with the environmental business. They are also able to make the long-term
decisions of organization.
• Analysis power: these leaders are better power of analysis the results with the help of their
skills and abilities which is based on their experience. They also provide the policies that
reduced the environmental problems.
Example:
David Orr is an environmentalist leader. He has written many books for providing the solutions
of the environmental issues. The main purpose of his book is to provide the vision of how to
deal with the problems.
Environmentalist leaders or Union leaders.
With the all above knowledge, here is a conclusion that in the organization there is a need of the
union leader for short-term projects because they are that person who can influence the orders
and sometimes they appear in a very powerful position. It is better to have such person in the
organization so that the organization is not suffer any kind of lose in the future.
But on long-term projects, an organization needs an environmentalist leader because they have
many abilities like skills, experience, knowledge etc which are needed for the progress of any
organization. Environmentalist leaders take the decisions with the changing situations and act
rightly.
Q no.03: Should a CEO be allowed to serve on another company’s board of
directors? Why or why not?
A CEO should not be allowed to serve on another company’s board of director. It may cause
many other conflicts and biasness issues that may cause a heavy loss for both corporations.
• Biased Attitude:
If a CEO of a firm will serve as a board of director to other firm he may be biased for his home
organization where he has been working for so long. There is a chance that he may take
decisions that creates a worth of his home company as compared to other organization. If there
is a biased attitude of CEO he may give more attention to his old company and may not be able
to think mutually for the benefits of both companies.
• Fails to accomplish tasks:
While having responsibilities of two companies the CEO may feel more burdened with this
great responsibility and fails to complete his tasks. There is a possibility that he would lack the
ability to handle the issues of both the organizations and may not give proper attention and time
to both the companies in this way both the companies will suffer a loss and will not be able to
deal with the stability issue.
• Lack in loyalty:
If a CEO of a company keeps more affiliation with his old company then he will not be able to
show his loyalty with his new company as a board of director. If he is not loyal to the new
company he may try to grab all the opportunities for his home organization and provide the key
information to his company so that his company can get more success and take decisions that
may not go well with his new company. He may indulge himself in providing all the secured
data and information to his old company so that the company can get more success and
competitive advantage over other companies.
• Lack in Strategic Decisions:
A CEO who is appointed as a board of director in another company may not be able to take
decisions differently or with diversity. For every new problem coming to a company he may
take similar decisions as he has taken previously. If he will not focus on the needs, type of
scenarios and will take decisions without understanding the need of hour then he will ultimately
take wrong decisions which may have work progressively for his old organization but will not
work for the other company.
• Conflict of Interest:
If a conflict of interest arises while working in the other organization then CEO will not be able
to perform his duties well. He will not take decision that will go with the benefits of the
company and he will be only focused towards his own interests and likings. This type of
approach will definitely lead the company to a great loss.
Q no. 04: What would be the result if the only insider on a corporation’s
board were the CEO?
Corporation’s Board of Directors
Board of directors oversight responsibilities that can be measured and boiled down to the four
most important following thing that they must do.
1) Right leader in the place: The first and foremost is to ensure that the right leader in the
place as CEO of the company and that there are robust effective system in place to develop
future leadership for the management succession and CEOs of the future.
2) Integrity and Accuracy: BODs of any corporation have to ensure that there is integrity
and accuracy in their financial reporting and in their financial planning and there are
system in the place to monitor and control the risk, execution of the plans and
compensation,key personnel kind practice and also financial reporting practices.
3) Participating in corporations plans: To participate in the process of forming the long
term strategies of the corporation and to monitor and approve on annual basis plans and
budgeting and also a major capital expenditure.
4) Always be there whenever crises occur: This is the most important one that is to be there
when crises or problems is to occur to make sure that the action are taken carefully and on
time and take right decision for right action that is done for the right reason.
Insider on a corporation’s board
The result and outcome of corporation performance is positive when corporation choose inside
board as CEO. Most of the company prefer to hire inside director as CEO of their corporation’s
board because they are well aware and know the management system of the corporation in
better way. They can control and handle each activity carefully. They perform and take action
according to the culture of the company. Moreover, if the insider on the corporation’s board are
CEO they are more beneficial to corporation as internally hired CEO are cheaper than the
external once and also have less influence on the stock rate/price during company’s transit
period.
If the corporation has stable business and has valuable long term strategic planning, clear the
sense of strategic vision then the inside on corporation board will be the best and good choice
as CEO
Example:
Microsoft is one of the most large business corporation. According to their CEO, Microsoft
have always good experience with their inside board of directors. He said that CEO that inside
on corporation’ board should always hire or choose by the corporation because they are more
familiar with culture and values of their company. The professor Yan Antea Zhang (Rice’s
Jones graduate School Of Business) said, Microsoft always prefer to choice board of directors
from the Inside corporation or business so the chance of error, mistaken cost and other type of
errors could be minimized. Today most of the family companies are introduced in which most
of the members at executive level are family member.
There are 2 most high rated benefits are:
1. All family member are come with same vision and that is to gain profitibility and increase
their personal wealth
2. Make their future generation strong.
What is the result if insider on a corporation’s board will the CEO?
The corporation result could be positive or some time negative. When we talk about their
positive side. Corporation feel comfort to deal with their inside board as their activities and
action are easily assessable.Corporations need Board of Directors so that they fulfil their
responsibility to protect the interest and rights of shareholders. As insider Board of Directors
ensure the reliability and integrity of their annual financial reports consisting of details of
financial as well as operational matters in a best way. Some time result could be negative as
insider board become biased in their decision making and are not focus on the company’s
overall gaols and don’t care of their people and shareholders but care of their personal interest
only.
Q no. 5: Should all CEOs be transformational leaders? Would you like to
work with a transformational leader?
Leader is person who always encourages his employee to work hard, provides them a direction
that how they can accomplish their task effectively and efficiently. Leaders act as the role
model for their people as well as change catalysts and the innovators
Transformational leaders
The transformational leaders are those who motivate their employees, provide them
opportunities to share their ideas or thoughts, provide them a platform where they can easy
communicate and share their problems related work, participate in decision making process so
that they get the maximum output and desire level of the performance. To keep the company
sustained and remain competitive in the changing environment of industries and the markets ,
transformational leader play a vital role as they always inspiring a positive change.

Transformational leadership

Provide Clear the

Motivation vision

Sharing of
knowledge

CEOs of any firm and business corporation should be transformational leader. If the CEOs of
the corporations do not have transformation style of leadership then their organization never
become a learning organization or can achieve their desired result. In transformation style of
leadership leaders actually start to identify, observe and focus on what their employees are
needed and how they get satisfied form their work and environment under which they work.
CEOs should be transformational leader because they can help their people to transform them
into what they want to be. Everyone who work in the particular organization want to be valued
and recognized by their firm. The organizations in which CEOs are not focusing on needs and
wants of their team and employees and do not understand their problems related to work as well
as personnel, are not outperformed organization, employees lose interest in their work, lose
their interest what they can deliver for the organization. CEOs of every organizations want their
employee to put their maximum effort in the work in order to get desire results and objective
but it is not possible if employees are not motivated , are not appreciated and rewarded.
CEOs as transformational leader must keep following points in their mind:
• Provide the opportunity to share knowledge throughout the organization.
• Never discourage or punish for failure.
• Always admire and appreciate the work of their employee so that they never disappoint and
become more motivated.
• As a transformational leader, CEOs continuously evaluate the firm performance and
employee performance either they need improvement or not.
• Make necessary change if required.
• Give them direction and clear the vision
• Make their employees passionate to go and deliver outstanding performance
• Adopt a proactive approach that makes firm’s future better.
CEOs really have to focus at what are their employees want because when CEOs (as
transformational leader) give their employees what they want then the employees have to give
what leaders want in return. For example; Dick Costolo-CEO of the Twitter stated that as leader
you have to deeply care about your people while not worrying or really even caring about what
they think about you. Once an interview Dr. Adnan Chilwan the CEO of first Islamic bank in
the work (Dubai Islamic bank), said that “I called myself as leader but I am not actually if I do
not hav ea team that are working with me. So as CEO we have to behave like transformational
leader. Transformational leader is to look at their people what they want, what type of
knowledge, skills, ability, competencies or a training they required to effectively perform their
task”. With the transformational style of leadership, CEOs of the corporations have to build
strong understanding with his people, have ability to demonstrate what they want to achieve,
how they can do so. CEOs of every firm should have transformational style of leadership so
that they can easily deliver their strategic vision and how to achieve competitive advantages.
Case study
The CEO of the Pepsico, Ms Indra Nooyi is consider one of the most popular and strong female
business leader in the world. She joined the Pepsico in 1994. She set the true example of
transformational leader.She walk barefooted around her office and singing. She actually knew
how to build an environment where everyone willing to perform and enhancing their
productivity. She gave the vision in such a manner so that everyone in the organization achieve
that vision easily and that is to be “Performance with the purpose”, she defined three most high
ranked factors that help them to achieve their vision:
1. Sustainability of human
Nooyi believes that the care of their employees and their customers should be the ultimate
challenges for the CEO. The product and services that company deliver must according to
their customer’s needs and demand.for sustaining the human it is important to understand
the internal and external factors. As Transformation leader CEO must care about every
little thing that could be the cause of failure and success. Nooyi as CEO said that give your
people what they want then they will give you what you want. Pepsico as food beverage
provide the healthier product to their customers and want to increase their revenue of
nutritionist food.
2. Sustainability of environmental factors
Environmental factor is also most important challenging for the CEO, Nooyi ensure that
Pepsico don’t harm natural environment and maintain healthy cooperative environment
where every employee are motivated and are directed toward their objectives.
3. Very person in the firm have to perform
CEO as transformation leader want their employees to help him/her to achieve goals and
objectives. If the CEO of the firm provide supportive culture in which employee feel safe
and comfort regarding their job then they automatically perform with 100% effort. As
happy employee is the productive employee. Ms. Nooyi said that she always tried to
encourage their people and this type of supportive culture groom their mental and
emotional abilities
Work with Transformational leader
Every person want to get appreciation and get reward of their efforts. We always prefer to work
for transformation leader because transformational leader is that person who can lead our
performance at desire level, provide the opportunity in which we can freely discuss ideas and
share our knowledge and accept the changes, provide high level of encouragement, and
continuous evaluate and improve our performance.