The New Corporate Governance Structures


The most significant change in the restructuring is the heightened role of corporate internal auditors. Auditors have traditionally been viewed as performing a necessary but perfunctory function, namely to probe corporate financial records for unintentional or illicit misrepresentations. Although a majority of US corporations have longstanding traditions of reporting that their auditors operated independently of CFO approval and that they had direct access to the board, in practice, the auditors’ work usually traveled through the organization’s hierarchical chain of command.

In the past, internal auditors reviewed financial reports generated by other corporate accountants. The auditors considered professional accounting and financial practices, as well as, relevant aspects of corporate law, and then presented their findings to the chief financial officer (CFO). Historically, the CFO reviewed the audits and determined the financial data and information that was to be presented to top management, directors, and investors of the company.

Because CEOs and audit committees sign-off on financial results, auditors now routinely deal directly with top corporate officials. Approximately 75 percent of senior corporate auditors now report directly to the Board of Directors’ audit committee. Additionally, to eliminate the potential for accounting problems, companies are establishing direct lines of communication between top managers and the board and auditors that inform the CFO but that are not dependent on CFO approval or authorization.

The new structure also provides the CEO information provided directly by the company’s chief compliance and chief accounting officers. Consequently, the CFO, who is responsible for ultimately approving all company payments, is not empowered to be the sole provider of data for financial evaluations by the CEO and board.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Shift to Customer Service


You may wonder what, exactly, caused the economic shift to service away from manufacturing. Some of the more prominent reasons are described herebelow:

  • Increased efficiency in technology. Because of the development and improvement of machines and computers, production and quality have increased. Two resulting side effects have been an increased need for service industries to care for the technology, and a decrease in manufacturing.
  • Globalization of the economy: Beginning in the 1960s, when worldwide trade barriers were lowered, a variety of factors have contributed to expanded international cooperation and competition. Since that time, advances in technology, communications, diplomacy, and transportation have opened new markets and allowed decentralized worldwide access for production, sales, and service.
  • Deregulation of many industries: the 1970s saw deregulation of industries (e.g., airlines, telephone) alongwith oil embargoes and political unrest (Vietnam, Iran) reducing US competition while allowing other countries free access to those areas of the world. The rapid deregulation of major US public services, competition (with an emphasis on providing service excellence) has flourished.
  • More women entering the workforce: Because more women are in the workplace, many of the traditional roles in society have shifted out of necessity or convenience to service providers.
  • Desire to better use leisure time: More than ever, workers of developed nations enjoy increasing amounts of leisure time. This has heightened a desire to relax, enjoy children, and do other things they value—people want to use their free time in more personally satisfying ways. To accomplish this, they now rely more heavily on service industries to maintain their desired lifestyles.
  • Expectation of quality service: Most customers expect that they will receive a quality product or service. If their expectations are not met, customers simply pick up the phone to call or visit a competing company where they can receive what they think they paid for. This created a need for more and better trained customer service professionals.
  • Better educated customers: Not only are customers more highly educated, they are also well informed about price, quality, and value of products and services. This has occurred in part because of advertising and publicity by companies competing for market share by the activity of consumer information and advocacy groups.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight