Discuss the pros and cons of the shareholder-primacy and director-primacy models of corporate governance

Read each of your classmates’ posts and post one follow-up message to TWO classmates’ posts in each weekly thread (with at least 150 words each). Your follow-up posts must contain substance and should add additional insight to your classmates’ opinions or challenge their opinions. It is never sufficient to simply say, “I agree with what you wrote” or “I really liked your post.” You must use your follow-up posts to continue the discussion at a high level of discourse. Be sure to read the follow-up posts to your own posts and reply to any questions or requests for clarification, including questions posted by your instructor.

KIMBERLY’S POST:

Good afternoon all,

Discuss the pros and cons of the shareholder-primacy and director-primacy models of corporate governance. Which do you prefer and why?

Shareholder primacy is a shareholder-centric form of corporate governance that focuses on maximizing the value of shareholders before considering the interests of other corporate stakeholders, such as society, the community, consumers, and employees.

Director primacy places priority to give board members independent power to pursue organizational interest for the shareholders.

Shareholder pros- Internal stakeholders with a large, vested interest in a business often sit on the board of directors. This stakeholder’s value is partially his business experience and partially his book of business relationships. The business acumen an experienced business leader has is highly beneficial for a business owner. Not only can the stakeholder offer mentoring advice, but the stakeholder can also help guide the company to grow properly and not make costly mistakes along the way.

Shareholder cons- Corporate decisions and strategy may transition into reaching short-term goals, which may result in hasty decision-making and decisions characterized by short-term incentives and bonuses to meet certain targets. Lack of willingness to take on risks and invest in new technologies may limit the growth of corporations and the potential to improve overall well-being with better products. More dividends paid out by corporations to provide income to shareholders instead of using the generated cash to make more and better strategic investment decisions, research, and development.

Director primacy pros- It eases decision-making capability; it helps to maximize shareholder returns. Extensive professional experience.

Director primacy cons- It can not expand the role of shareholders. Unrestricted power.

I would prefer shareholders primacy because it gives you the power in decision making. Also shareholders can influence the business strategic decisions and is able to negotiate the level of influence in the firm.

JEFFRION’S POST:

Discuss the pros and cons of the shareholder-primacy and director-primacy models of corporate governance. Which do you prefer and why?

Shareholder-primacy is a theory in corporate governance holding that shareholder interests should be assigned first priority relative to all other corporate stakeholders.

Pros of shareholder-primacy is that it gives you directly contact with the corporate decision making and the power to amend things.

Cons of shareholder-primacy will be the clashing of the corporate and the shareholders with the creditors.

Director-primacy is board-centric, but shareholder wealth focused.

Pros of director-primacy shows power of directors to manage the corporation and their obligation to do so in the shareholders’ interest creates a variant of the principal-agent problem.

Cons of director-primacy is a core tension between the board’s authority and the need to ensure that the board uses its authority responsibly.

Restructuring

You are required to respond to at least two of your peers’ initial posts with a substantial response. Responses to peers should be at least two paragraphs and be substantive in nature. Substantive means that you should add something to the discussion, referring to the original post. Referring to any reading or other scholarship is always a plus.

o Respond to two different peers’ initial posts, other than yourself. That is required and you will lose points if you do not participate to this minimum extent.

Guided Response: Assume the role of the employee and respond to at least two of your classmates’ posts by discussing your perception of the communication strategies chosen.

DYANI’S POST:

One of the most challenging tasks in organizations is communication. Employees commonly express their dissatisfaction with this area throughout organizational change and day-to-day operations (Heathfield, 2021).

This week’s lectures advise that communication is essential for change implementation and long-term success. According to Palmer et al. (2021), one of the most mentioned change drivers is communication, which explains why change is necessary and how it will be accomplished. On the contrary, a major cause of change failure is a lack of communication.

Personnel changes can also affect people on a personal level thus it is important to determine how much information should be shared and any potential benefits to the change.

In the past, I have been tasked with communicating personnel changes within my organization and many times the information was rarely positive. Communication regarding organizational changes should always be a two-way channel. In my organization we host town hall meetings, which has been effective when communicating personnel changes as it provides a platform for questions and answers.

Communicating the reasons for the personnel changes so that everyone understands the framework, purpose, and necessity is essential. For change managers, it is also important to determine factors that could affect coding and decoding when planning a communication strategy, and to tailor text information and channels accordingly (Palmer et al., 2021).

A change management communication plan should be developed by leaders who are conveying organizational changes to employees. The way leaders communicate with employees about changes must be deemed significant and held to the same standard as the change process overall.

Communicating change can be difficult. Whether the company is going through organizational changes such as adjusting to remote work due to COVID, positive encouragement from leadership is essential. Whatever the change, providing employees with a boost in morale by seeing them adapt and overcome the changes is critical.

Finally, the liaison should make time to be available to employees, maintaining open lines of communication and being willing to listen at all times.

References:

Heathfield, S. (2021). Communication in Change Management. The Balance Careers. Retrieved from https://www.thebalancecareers.com/communication-in-change-management-1917805

Palmer, I., Dunford, R., & Buchanan, D. (2022). Managing organizational change: A multiple perspectives approach (4th ed.). McGraw-Hill Education.

MARGUERITE’S POST:

Using the communication strategies found in the text, what actions will you take to format the conversation with employees regarding the restructuring process?

When a company is preparing for a ‘potential personnel change’ it commonly means that the company is growing at a rapid rate or it is facing the need for layoffs in order to be remain financially viable, either way it means a lot of change for the employees. Employees are asked to grapple with change all the time, such as process changes or product enhancements, however when it comes to personnel changes employees are thrown into a different arena of change. It is important to remember the role that a person’s job may play in their life, for many people their job is much more than a paycheck, it provides a sense of belonging, safety, and stability, and the role that they play within this framework is part of what holds those feelings together. As a change manager tasked with the challenge of communicating potential personnel changes, I would first take steps to make sure that I personally fully understood what the key stakeholders for whom I was serving as a liaison for, wanted as the outcome. As stated by Palmer, Dunford, and Buchanan (2017): “Change managers need to understand the deep discursive structures that underpin the surface communication of stakeholders” (p.232).

As a change manager leading into potentially difficult conversations, it is important that I feel confident and stable in the message that I am delivering so that even if met with emotion or resistance, I am able to remain focused and calm. Secondly, I would communicate with each employee in a private setting that was setup to support open and honest communication, space and environment are very important when delivering sensitive information and I would want my employees to feel safe to express themselves and their feelings. Thirdly, I would decide on the language and words I would use well in advance. Personnel changes can cause fear which can trigger confusion and, in such situations, people are more likely to remember and place a great deal of weight on the words they hear. I would also take the position of the caretaker image for change; this would grant me the tools to sympathize and provide support rather than drive for a result. For some people in certain situations, “personnel changes” can represent a kind of loss, they might be losing their current position or losing their job entirely and it is important to recognize the emotionality that this can cause for people and that the need for them to grieve needs to be understood (Folz, 2016). I would make sure to offer ample time at the end of each conversation for questions and also make sure that people were offered additional times at a later date/time to ask questions that can up for them later. I think when delivering this type of information, there is often a temptation to sugarcoat things and attempt to downplay the significance of the information in order to make oneself and others feel comfortable, and to me that is somewhat dishonest. Authenticity about the nature of the change and how it may affect the person needs to be clearly and lovingly communicated, nobody likes surprises and surprises in adulthood often simply feel like lies.

I would prepare for these conversations by asking myself “how would I like to receive this information?” and then walk backwards from that in order to arrive at the most neutral yet flexible delivery style.

References:

Folz, C. (August 25th, 2016) How to Deliver Bad News. SHRM.com. https://www.shrm.org/hr-today/news/hr-magazine/0916/pages/how-to-deliver-bad-news.aspx (Links to an external site.)

Palmer, I., Dunford, R., & Buchanan, D. (2017). Managing organizational change: A multiple perspectives approach (4th Ed.). McGraw-Hill Education. https://redshelf.com/

Skillful Communication

You are required to respond to at least two of your peers’ initial posts with a substantial response. Responses to peers should be at least two paragraphs and be substantive in nature. Substantive means that you should add something to the discussion, referring to the original post. Referring to any reading or other scholarship is always a plus.

o Respond to two different peers’ initial posts, other than yourself. That is required and you will lose points if you do not participate to this minimum extent.

Guided Response: Respond to at least two of your classmates’ posts. Compare their choice of communication skills to the choices you made.

DAWN’S POST:

One of the most important leadership skills required developing employee ownership and acceptance of change initiatives is communication. Leaders need to focus on telling what the change is and why it is happening. Explaining to reason for the change enables the leader to connect the advantages and significances which will create a buy-in from the employees.

Collaboration is the second leader skill that needs to be present during change as people need to be brought together to plan the next steps of the change. Team meetings and one on one sessions will be needed to collaborate so all of the employees can be part of the decision making earlier rather than later.

Commitment is the third leadership skill that needs to be place as successful leaders need to believe and support the change as much as the employees need to. Change is very difficult so leaders that take the initiative and are persistent in helping the employees with the transformation will be one step ahead of helping the change go smoothly.

Focusing on the bigger picture with devotion and effort will ensure all employees will follow in the change process. Palmer states for the supportive style communication approach “leaders are concerned with creating an open and consensual environment, and their communication style is based on involvement”(Palmer, 2022). In addition, the catalyzing stage of leadership style” uses inspirational and supportive aspects to motivate and engage”(Palmer, 2022). Both are important leadership skills that should be required for change initiatives within a company.

Reference

Palmer, I., Dunford, R., & Buchanan, D. (2022). Managing organizational change: A multiple perspectives approach (4th ed.). McGraw-Hill Education.

TISHA’S POST:

There are numerous qualities a change manager should exhibit to successfully communicate change, develop employee ownership, and obtain acceptance of the change. However, I would presume it is infrequent to display all the qualities necessary to thrive in any given situation as communicating change is complex and often met with resistance. As such, I believe resiliency is a key quality to have due to the “pressure, pace, stress, risks, and vulnerability of the role, change managers ideally need to be resilient” (Palmer et al., 2022, p. 400). Being resilient allows for a change manager to adapt to the various situations met when communicating to employees.

Other qualities of being a skillful communicator I find helpful are similar to what I strive to achieve in my professional career. Exuding confidence when communicating showcases one’s expertise in the subject matter, which is vital to gaining acceptance. Another critical quality I rely on today is my intuition. Being intuitive allows one to exhibit awareness of how the recipients receive the information and how to pivot. Flexibility is another trait I believe is vital for a change manager. Having a script is imperative; however, having a strong intuition as to how the message is being received and being flexible with the messaging will allow for less resistance as the information becomes more relatable. Change managers who can read the room and work with the audience to accept change exhibit resilience, confidence, intuition, and flexibility.

Palmer, I., Dunford, R., & Buchanan, D. (2022). Managing organizational change: A multiple perspectives approach (4th ed.). McGraw-Hill Education.

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