Showing posts with label unity of command. Show all posts
Showing posts with label unity of command. Show all posts

Friday, January 12, 2018

Unity of direction strong leadership is essential for business success

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
January 18, 2018

Image result for unity of command principle of management


Image result for unity of command principle of management

Henry Fayol said in his one of  his principles of management "Unity of Direction  ie that the organization must take command from a center from a leader. It means that there should be only one conductor in an orchestra, one chef running the kitchen.Too many cooks spoil the broth.

I learned this lesson the hard way.  Being a good brother I followed to the letter the instruction of our parents to divide the estate equally among the 5 children. Which I did.  Not knowing that they will take control and kick me out of the board in accordance with Sec. 28 of corporation code (the  majority (2/3) of the board can kick you out without any reason whatsover

To wit:

Sec. 28. Removal of directors or trustees. - Any director or trustee of a corporation may be removed from office by a vote of the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or if the corporation be a non-stock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote: Provided, That such removal shall take place either at a regular meeting of the corporation or at a special meeting called for the purpose, and in either case, after previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting. A special meeting of the stockholders or members of a corporation for the purpose of removal of directors or trustees, or any of them, must be called by the secretary on order of the president or on the written demand of the stockholders representing or holding at least a majority of the outstanding capital stock, or, if it be a non-stock corporation, on the written demand of a majority of the members entitled to vote. Should the secretary fail or refuse to call the special meeting upon such demand or fail or refuse to give the notice, or if there is no secretary, the call for the meeting may be addressed directly to the stockholders or members by any stockholder or member of the corporation signing the demand. Notice of the time and place of such meeting, as well as of the intention to propose such removal, must be given by publication or by written notice prescribed in this Code. Removal may be with or without cause: Provided, That removal without cause may not be used to deprive minority stockholders or members of the right of representation to which they may be entitled under Section 24 of this Code.

Having learned the lesson the hard way (I do not get my dividends, I cant get back my investment for some of the projects, the business is going haywire -  lose of direction, lose of focus, mistakes in decision making. Well the siblings left are old and mature enough to know what they are doing but to what extent?) I should have done the following:

     1. Should have a holding company (which I had  majority control of ) to hold stocks of subsidiary companies;    and strong corporate staff to oversee all the business. Initially we had that
    2. Always be the majority - 50% + 1, or have proxy votes signed from among others or voting trust agreement.

Democracy has no place in corporate governance.  The very term itself defines how to run a business group - to govern. Short of being a monarch or dictator.

That is the only way.   When the organization is in disarray, the end is in sight.

I know of one group - of professionals who had equal voting rights. and their only key resource is a huge  loan from a govt bank  However their weakness now is:

     1   Giving management responsibility to each stockholder, even if he/she is not lacks management
          expertise in that area;

    2.  Having job rotation in top exec position

    3.  No central control or supervisory board to supervise how other boards are doing

    Since they are equals, no one can mind and change errors of colleagues And when the mistakes pile up...

Even if there are subsidiaries, there should be strong central management, as we have one President who should be respected and followed