Shareholder Governance Model

ShareholderGovernance Model

Corporategovernance as portrayed in various organizations is an importantaspect. Transparency is also core in ensuring reduced conflicts amongstakeholders as well as management. However, not all organizationsare suited with this mechanism due to the cost repercussionsincurred. The shareholder governance model tends to incorporate allthe persons involved in the operations of the organization. In thatrespect, so many people are involved in decision making. In theprocess, decisions made tend to be profitable to the organizationwith limited conflicts among stakeholders. Additionally, the practicetends to legitimize large organization’s operations due to thetransparency facets involved. If for instance, big organizationsutilize the management kind of governance where decisions are made bytop management, it would probably cause discontent among fellowstakeholders.

Asevident in many organizations, once top management secludes itselfinto making important decisions for the company without necessarilyinvolving other members, wrangles may arise. However, employing ashareholder corporate governance minimizes such fears. All partiesare involved in making the decisions hence cannot complain whencertain things go wrong. If a decision is implemented and does notresult to the prospected outcomes, no party blames the other. Unlikethe management model, whereby the board is grilled whenever decisionsdo not yield favorable outcomes, the shareholder technique is quiteopen. The board cannot be grilled for any wrong doing since thedecisions involved all the persons involved with the company.

Onemajor detrimental aspect of shareholder governance model involvescosts. The practice is deemed much expensive owing to the partiesinvolved unlike management which involves a smaller size. Even thoughexpensive, the company in consideration will most likely benefit fromthe shareholder approach than any other. The enormity of the companywill most definitely benefit from involvement of shareholders ingovernance.


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