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The fish rots from the head

New book from Cass professor reveals valuable corporate governance lessons

As a Chinese proverb says, "The fish rots from the head". So it is with businesses and other organisations - the buck starts and stops in the boardroom. In the newly-published edition of his bestselling book, Visiting Professor at Cass, Bob Garratt, highlights the importance of effective corporate governance with a series of new insights no director can afford to ignore.

Building on his internationally tested Learning Board model he shows how a return to board basics, backed by a proper adherence to Company law, are essential post the corporate scandals of the early 2000's and the recent financial crisis. "No more 'executive directors' or 'non-executive directors' just 'statutory directors' as required by law," he says. "Directing is a 24/7 commitment so that even a "professional director" can have no more than four directorships without putting their fiduciary duty to the company at risk."

And he goes further, arguing that because corporate governance grew out of a very limited focus on companies quoted on stock exchanges the rest of society has been effectively excluded from acceptance of the huge benefits of effective corporate governance and competent directors. So he has published a Modest Manifesto which calls for the Companies Act and Corporate Governance codes to be applied to all registered organisations in a country - private, public including state-owned enterprises, and not-for-profits.

He argues that government does not understand corporate governance and therefore writes laws and codes which cut across the existing laws that have developed well over the centuries. He is particularly scathing of the governmental concept that the Chief Executive of a public body, rather than the Chairman, is the 'Accounting Officer' thereby negating the ultimate authority of the chairman of the board - a proven key to the effectiveness of a board in any realm other than government.

He has focused this third edition on the building of board competence, individually and collectively with particular emphasis on the rigorous annual appraisal processes and the publication to the owners of much more information from this process. The result is a thought-provoking and practical book that will be relevant to all those with responsibility for corporate governance - and also those who subject them to scrutiny.

The Fish Rots from the Head: Developing Effective Board Directors (Profile Books)

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