Associated Contents: May 2011

Thursday, May 19, 2011

6 Essential Keys To Spiritual Development

6 Essential Keys to Spiritual Development

1. Control of thoughts.
2. Control of our actions.
3. Equanimity.
4. Understand every being.
5. Complete openness.
6. Inner harmony.

1. Control of thoughts is indeed important towards your spiritual growth. We must master our thoughts, particularly our train of thought. The way thoughts whirl about in our souls, how they flit like will o’-the-wisps; one impression arises here, another there, and each changes our thinking. Our minds are the most important thing that we possess. The thoughts of the mind are actually lived out in the person. We must learn how to use our minds and even control it. The mind is a sponge. It takes in everything that is subjected to it, whether go or bad. It is extremely important to control our thoughts and only allow what we want into our minds. God created us with something by which we can guard and protect our thoughts. The special something we were given is our Will, means we can CHOOSE what we want to receive into our mind. Our minds are gold mines. Why would we let thoughts come into it that rob us of a life of abundance and good health? So, think positively and attracts all the best things in our life.
Our feelings (emotions) also influent by our thoughts. Feelings are of two kinds: Good or Bad. We either feel good, or we feel bad. These feels are indicators as to what our minds are set on. If you FEEL lack, that is because you are THINKING in terms of lack and that makes you feel bad. If you feel abundance that just means that you have thoughts of abundance and thus have good feelings. Are you feeling bad? Change the focus (By the use of your Will) of your thoughts! Are you feeling good? Keep (Again, through the exercise of the Will) feeding the thoughts that produce these good feeling(s)

2. Here it is necessary, occasionally at least, to act in ways that are not precipitated by anything external. Whatever is initiated by our place in life, our profession, or our situation does not lead more deeply into higher life. Higher life depends upon such intimate matters as one’s resolve to do something that springs completely from one’s own initiative—even if it is something absolutely insignificant. No other actions contribute anything to the higher life. Think before we act, in order to control our actions, we have to control our thoughts first.
Here are some practical suggestions:
We must keep our minds clear of negativity. Do not get influent by the news media that will make you mad, sad, depressed, or worry.. There is nothing that important on the news. News comes by seeing and hearing. These two senses are the main way our mind if affected. Why waste valuable time listening to slanted, biased media demean other human beings, the country in which we live, and show us the lowest forms of humanity?
Don't blame others for the life we live. We are responsible for controlling our thoughts and thus our destiny. Don't envy people who seem to have it all. Most of them got that way only because they think differently than you do. If you are failing in your life it's because you chose to.
Train your minds, change your brain and discipline your actions. What will you do with your mind? Don’t waste it on watching news, playing video games and other meaningless activities. Instead, exercise your mind through reading, playing Sudoku, joining workshop like photography, drawing, health talk and etc. Live your life to the standard you desire.
Another suggestion is to read. Most people stop reading after they leave school. Even those who read, read novels, magazines, and newspapers that do not improve their lives one bit. Read good books that will improve the way you think. Read books like THINK AND GROW RICH, THE GO-GETTER, THE SLIGHT EDGE, THE SCIENCE OF GETTING RICH, BEACH MONEY, and many, many more. These books feed your mind with creativity, hope, encouragement and so much more. Read about Thomas Edison, Napoleon Hill, Henry Ford, and others, who against all odds soared into the stratosphere taking humanity to new heights.

3. Equanimity is a state of mental or emotional stability or composure arising from a sense of temporal detachment from reality. People fluctuate back and forth between joy and sorrow. Thus we allow ourselves to be rocked on the waves of life. We must reach equanimity and steadiness. One must become steadfast and even-tempered.

4. Nothing expresses more beautifully what it means to understand every being than the legend passed down to us by a Persian story. Try always to approach what is wonderful in every phenomenon of outer reality. You will see that everything contains an aspect that can be affirmed.
Sharing, praying and helping each other enhance spiritual intimacy. Since sharing is caring, it’s good to share. Praying together is probably the strongest knot that binds people. Once you have developed the habit of talking about your faith and praying together, you can begin to encourage each other's spiritual growth. Help each other in spiritual development. When you help people, you learn more!

5. Change our patterns and open our minds. Most people judge new things according to the old things they already know. But we must not confront a new communication immediately with our own opinion. We must instead always remain alert for the possibility of learning something new. We must develop the ability to listen, because it enables us to encounter matters with the greatest possible openness.

6. We receive this after we have developed the first five keys. Those who have the other qualities are also inwardly harmonious. Anything is possible if you open your mind to infinite possibilities.
You can make a difference. You can live a life way beyond where you are now. You can better yourself and those around you just be learning to control your thoughts and thus your living. Be a light to those around you, a beacon of hope to those in despair and you will be rewarded accordingly.

Life is like a ……………………….
Reflections by participants at the Senior Citizen Center of Hindu Temple, Bowne Street, Queens – Facilitated by Rathi Raja Feb 4, 2009

Meena Mani
Life is like a Pencil
Your parents and teachers try to sharpen your brains while you are young.
You have falls and hardships and you become blunt.
Sometimes you think you are sharp and hurt other people’s feelings.
Other times you are blunt and ruffle feathers anyway.
Each experience sharpens you constantly and hopefully matures you.
But in the process your life expectancy is shortening and
Finally when you leave this world
Nothing is left of you but the shavings or your contacts with people.

Radha Sankar
Life is like a Car
We drive it.
First we get comfortable within.
And the best part is we are in control to steer.
In whichever way we want to go.
It can be in a safe path or the wrong path.
Which may lead up to a crash.
So we are in control of our life.
Do you want to change your life? Do you want to be a success? It all starts with the way you think.

References:
http://www.messagestogod.com/blog/
http://en.wikipedia.org/wiki/Equanimity
http://ezinearticles.com/?Learn-How-to-Control-Your-Thoughts&id=1424793
file:///C:/Users/Toshiba/Desktop/my%20homework.html
http://www.kyria.com/topics/marriagefamily/marriage/spirituality/17.60.html
http://en.wikipedia.org/wiki/Equanimity
http://rathiraja.wordpress.com/

6 Essential Keys To Spiritual Development

Tuesday, May 17, 2011

10 Common Problems Students Face During College

10 Common Problems Students Face during College

The Best of Times - The Worst of Times

While time spent at college is a fond memory and a happy experience for most, college life is not without its rough patches and problems. While each persons problems are unique to their current circumstances, I know that there are a few problems that almost all college students deal with at least once during their time at school. If you are on your way into college you might want to get a jump on how to deal with the 10 Common Problems Students Face During College. If you are reading for the sake of remembrance and posterity, I would ask that you try and throw a few good memories into the mix as you plod through the problems that once plagued you in your youth, or not so distant past.

1. Study.

Problem: College is challenging. For many it requires a much larger effort than high school did, and unlike most high schools, college packs about two years of classes into one. Many students take a full 15 credit semester, while other try to cram in 18 or even 21 credits. At times it seems impossible for students to stay on top of it all.
Solution: College students need to realize their limits. If they can't handle 18 credit semesters, it will be worth it in the long run to slow down a little and only take 15. While the purpose of college is to study and to further the education of an individual, that doesn't mean students should study all of the time. It is important to schedule time for fun outside of study, and to take study breaks to keep the mind fresh and clear. For more information on studying see the Effective Study Habits guide.

2. Money

Problem: Tuition costs are rising at alarmingly high rates. Couple that with eating out, shopping trips, gas for the car, and the price of textbooks, and you have a college student's worst nightmare. College students drop out of school each year because they cannot afford it. Others are forced to juggle full schedules with full time jobs to make ends meet. It is becoming increasingly harder for students to graduate debt-free.
Solution: A new startup called BuzzFund is aiming to change the way that students pay for college. Buzzfund is a website where college students can post their personal profile, and donors can search for students to provide scholarships to. In addition, students can make less shopping trips, eat out less, carpool and share or buy used books to try to save some money.

3. Job

Problem: To combat the high price of college tuition, many students must get a job. Juggling a job, 15 to 18 credits, and sometimes a club or sports team is quite a chore. Many students try to cram all of these activities into one day, and time spent sleeping suffers. Without proper rest, the student can then become susceptible to different kinds of health problems.
Solution: Decide what is important. The student must prioritize and then schedule events, games, meetings, and studies accordingly. Also, a college student must be well aware of thier options when getting a job. Many times the university will offer jobs to students that are flexible and fit into the student's schedule. For more information see the College Jobs Guide.

4. Homesickness

Problem: Whether they admit it or not, most students will at one point get homesick. This is especially common for students who go to a school that is more than 3 hours from their home. Homesickness also affects freshman as it is presumably their first year away from home, and most freshman are not allowed to have a car during their first year at university.
Solution: If the student lives within 3 - 4 hours from home (considered a comfortable day's drive) they can plan to visit home perhaps once every month or two. Care packages, emails, and phone calls to and from friends and family members can also greatly assist in reducing feelings of homesickness.

5. Depression

Problem: Most every problem on here has seemed quite dismal. These problems raise the stress levels of students. Some find relief in partying, and others (even some who party) find themselves getting depressed from their problems.
Solution: If high stress levels and depression are an issue, it is best to seek professional attention. Many campuses have free counseling programs for the benefit of students. Many counselors are more than willing to listen and help students get back on track. (This doesn't mean the partying has to stop either, so long as students are partying responsibly and legally.)

6. Sickness / Health Conditions

Problem: With heightened levels of stress and lack of sleep, health problems can occur. Living in close quarters in dorms also poses potential health risks and increases a student's chances of contracting some sort of virus or other sickness.
Solution: College students should eat healty and balanced meals. It is also important for students to get a good night's rest as well. Keeping hands, bathrooms, door knobs, and other shared spaces clean will also reduce the risk of students coming down with sickness. If sickness and health issues do develop, most campuses will have a nurse on standby to provide medical assistance and advice.

7. Friends / Roommates

Problem: Friends and roommates are usually good for a good time. However, they can get on each others nerves at times. Because these students are living together in close quarters and seeing each other each day, this is just not a good thing
Solution: Students must remember to take some time out for themselves. If possible, students should get away from campus for a little while and go to a coffee shop or a mall and just take some time to gather their thoughts and be themselves. If conflicts do arise, it is best to get others (such as an RA or other friends) involved so that the spirit of community, unity, and peace at the college can continue to be upheld.

8. Partying

Problem: Partying in itself really is not a problem. Parties were designed so that attendees could have a good time. However, many of the parties that go on at colleges today have the potential to cause problems. At many parties alcohol, drugs, and sex rule the night. Alcohol can lead to drunkenness and potentially deadly situations. Having sex without taking the necessary precautions can spread disease.
Solution: While parties are a good time, students should plan to enjoy them in a responsible and legal way to ensure that they do not create problems for themselves for others. A simple internet search for drunk driving will turn up plenty of pictures and news articles which really do not need to be repeated.

9. Relationships

Problem: Relationships are good, but at times they can become a problem. There are times in every relationships where a couple will have a disagreement or issue. Disagreements between couples can distract students from their school work and add to already high stress levels. Break-ups can drive some students even further into depression.
Solution: Relationship advice is hard to give. It will usually vary on a case by case basis. Couples should try and reconcile their differences. If break-ups do occur, it might be best to consult with a school counselor concerning feelings of depression.

10. Choosing a Major

Problem: Many students exert a lot of stress on choosing a major. Most of them think that their major will dictate their future career and how much money they will make at their future jobs.
Solution: College majors have some importance, but they do not chisel future careers or wages in stone. Students should choose something that they like to do. If a student is unsure about what major to choose, they should choose something broad and versatile, such as a degree in communications. Many students who have gotten their Bachelor's degree in one field have progressed to get a Master's degree in a different one. Worrying about what field to major is simply not worth it. Worrying about gaining knowledge and life skills during a college education is.

10 Reasons Why You Can't Get What You Want

10 Reasons Why You Can't Get What You Want

I believe that all of us want happiness and success in life.
However, very few can actually admit that they have got there.
Many didn't know why they aren't successful, so few knew why, but didn't do anything about it.
I have the privilege to come across a list of reasons why most people couldn't achieve happiness or success in life.
As I read through, I too discovered that some of the reasons here have been standing in the way between success and me
As you go over the list now, check yourself by it, point by point, to find out how many of these causes-of-failure stand between you and success.

Lack of purpose in life - Before I start taking my life seriously, I have no major purpose in life.
All day long, I would either play games at home, or after work, chill out with my friends.
There is no sense of responsibility to my family, no commitment at work and of cause, no purpose.
Life was pretty much a routine. A routine that I hate, a routine that I want to get rid of.

Many people I have come across are leading the life that I have led years ago.
And gradually I discovered that lack of purpose in life (or anything else for that matter)
is always and will always be at the top of the list of failure.

Lack of ambition to aim high - People who are not happy at where they are and yet
are unwilling to aim high above mediocre and pay the price of success, will never be happy.
I have seen them, they will whine about their work, about their boss, about everything
and anything under the sun. But they aren't willing to work on it, to find out how to get ahead of the pack.

When told of what they could have done so that they could get out of the rug, they will come up will excuses for not able to do it.
No success will ever befall on those who lack the ambition to aim high above the mediocrity.

Insufficient education - This is a handicap, which can be overcome with ease.
How many times have you read or heard of successful people having little or no educational background?
Experience has proven that the best-educated people are often those who are known as "self-made" or self-educated.
In times like these, college degree alone is no longer sufficient to bring you to the top.

Education consists, not so much of knowledge, but of knowledge effectively and persistently applied.
We are paid, not merely for what we know, but more particularly for what we do with which we know.

Lack of self-discipline - Self-discipline comes from self-control.
This means you need to control all the negative qualities you believe you have.
Self-control, though is a skill, will be one of the hardest skill you will ever learnt.
However, if you do not conquer yourself, yourself will conquer you.

Ill health - No one can enjoy outstanding success without good health.
Many causes of ill health is the result of poor self-control.
Some of the examples that contribute to ill health are

- Overeating
- Wrong habits of thought
- Smoking
- Lack of proper physical exercise
- Drinking

Unfavorable environmental influence - Most people who have tendency to commit crime
acquire them as the result of bad environment and improper associates during childhood.

Procrastination - One of the most common causes of failures. Procrastination is the deferment
or avoidance of an action or task and is often linked to perfection.
Most people failed in life because they are waiting for the 'time to be right'. The thing is, the time will never be right.
Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.

Lack of persistence - There are many good 'starters', but very few finishers of everything they begin.
They will begin something with high hopes and enthusiasm but loss that excitement when they are facing the first sign of defeat.
But we ought to learn that nothing substitute the lack of persistence. And those who know this discovered that failure has no way in coping persistence.

Negative personality - There is no hope of success for a person who repels others through negative personality.
Not many realize this; success is attained through the cooperation efforts of other people. A negative personality will not induce cooperation.

Above are 10 reasons that may have stopped you from achieving happiness, attaining success.
Look through it and see if you have possessed any of them. If you have, ask yourself "what will you do to overcome them?"

10 Reasons Breakfast Is A Must

10 reasons breakfast is a MUST

Is it an old wives' tale, or is breakfast really the most important meal of the day? Perhaps your mother always made you eat hot lumpy cereal in the morning, so as soon as you escaped her clutches, you developed the coffee and cigarette habit in college, and ever since then breakfast was a bagel... at lunchtime.
You’ve realised your adolescence ended (about 10 years ago!) and now it’s time for a change. You’ve stopped that smoking thing... it was smelly and made your teeth yellow anyway. But your trousers are too tight, you can’t climb a set of stairs without huffing and puffing and you feel much older than your years.
Back to breakfast... yes it’s true, breakfast can make or break a diet, because breakfast helps set the tone for the rest of the day. If you’re one of those people who think skipping breakfast is a good way to lose weight... think again. Here are the top reasons why you should definitely eat breakfast, every day:
1. Break the fast. Ever think of what "breakfast" means? Your body responds to not eating for hours and hours by slowing down its metabolic rate. By eating breakfast, you wake up your metabolism and get your engine humming, burning those calories you need to burn to lose weight.
2. Eat more, weigh less. Researchers have repeatedly shown that people who eat breakfast have a better chance of losing weight, and keeping it off. When you skip meals, you’re so hungry by lunchtime you eat the entire cow! Research carried out at Queen Margaret University, Edinburgh has shown that eating breakfast cereal in the morning helps aid weight loss.
3. Are you interested in doing better at work and school? Don’t be a bed head... breakfast helps wake you up. Studies show that people who eat breakfast are more alert and do better on tests than people who skip breakfast. Conversely, a hungry child can be apathetic, disinterested, and irritable when confronted with difficult tasks. Breakfast is the key." No doubt adults need breakfast as much as kids do.
4. Breakfast is your chance to eat the foods you may not eat the rest of the day. You can have whole-grain cereal and berries with non-fat milk - here is your fibre, folic acid and calcium in one easy-to-grab bowl. Low-carbers need to go very easy on grains, so opt for the highest-fibre brand you can find. However, why not indulge instead in the typical eggs and bacon breakfast most other eating plans frown upon?
5. Skipping breakfast makes you grouchy. Studies show that people who eat breakfast tend to be in better moods (when I’m hungry - watch out!). Breakfast gets you started on the right track for the day. If you start out with a healthy breakfast, then you set the mood for lunch. You're more likely to choose something reasonable for lunch if you’ve paid some attention to your breakfast choices.
6. Cancel the Danish or sugared donut first thing in the morning - they cause a blood sugar dip a couple of hours later. You’ll be desperate for something to perk you up, and are more likely to grab another high-sugar refined carb, for a quick sugar rush.
7. Breakfast makes your machine run better. Get yourself on a schedule with a healthy breakfast, and you’re ready to take on the world.
8. If you're a parent, set a good example. By skipping breakfast, your kids will think it’s not important. Breakfast doesn't have to be a big affair, but don’t wimp out... make it a habit, and your kids will be way ahead of the game too.
9. Don’t eat dessert for breakfast. If you think a cereal bar with 30 grams of sugar is a breakfast item, then think again. Some cereal bars contain nearly as much sugar and fat as a regular chocolate bar.
10. One more word about labels... if it says, "Nutritious," it doesn’t necessarily mean it’s healthy. Cereal manufacturers are experts in marketing, using words that send a message of health, but unless you read the labels, eat at your own risk. Kids’ cereals often have more sugar than sweets. Protect your kids from getting hooked on these cereals... they’ll get used to all the sugar, and will want only pre-sweetened cereals.
Whatever your diet you follow... breakfast is one meal you don’t want to miss.

Researched Proposal For Maintaining Fair And Effective Compensation Practice At Zoom Systems (Fictional Company)

MEMORANDUM

To: Robert MacGregor, VP Product Engineering, Zoom Systems, Inc.
From: James Monaco, Design Center Manager – Austin Office
Date: 8 May2010
Subject: Maintaining Fair and Effective Compensation Practice at Zoom Systems

Zoom Systems, Inc. must strive to remain competitive, profitable, productive, and survive as an organization. To do so may require challenging corporate history and conventional wisdom with respect to executive compensation.

For the past ten years many United States businesses have been rocked by crises and scandals.
Some of the more well known individuals and companies involved include MCI, Enron, Tyco, Goldman Sachs, Martha Stewart, Bernie Madoff, and more. Pundits and commentators have referred the top executives involved as “Looters”. The accusers have wondered how those trusted with fiduciary responsibilities for their companies to permit the huge salaries, bonuses, and perks for non-performance. Who invented golden parachutes?

I believe a major contributing factor centers around power imbalance and the associated compensation inequality. CEO and top executive salaries at major US corporations exceed 300 times the salary of their average workers. In large successful companies in Australia, Germany, and Japan, where top executive salaries range from 10 to 25 times that of average workers’, there are far fewer scandals and greater confidence in corporations. Hundreds of scholarly and news articles have examined the issue of compensation – especially for top executives. Many arguments have been made and conflicting conclusions have been reached. In a time when stockholders, employees, customers, and the general population, no longer trust prominent companies, something must be done to prevent such circumstances at Zoom.

I believe after considering the arguments presented within this study “Maintaining Fair and Effective Compensation Practice at Zoom Systems”, you will agree to assist me by recommending its conclusions to our Stockholders, the Board of Directors, and all of our employees. When you are ready discuss this report, I can be contacted via phone at x6360 or e-mailed at jmonaco@zoominc.com.

Thank you for considering my proposal.

James Monaco

EXECUTIVE SUMMARY

Introduction

Will Zoom Systems, Inc. remain in existence 30, 50, or 100 years from today? It may not if executive compensation trends in our company continue on present course. Extreme inequality between pay for our top executives and our average workers will in likelihood lead to the company’s demise. This proposal examines where we’ve been and what forces are at work. It suggests a foundation for maintaining a fair and effective compensation system. This will improve our company’s long-term chances for survival.

In this report I will discuss:

– Background information about the identified concerns.
– Why a need exists to take action.
– What research the study examined.
– How the new system affects our annual budget.
– Conclusions and recommendations.

No system of compensation is perfect. The system we now have is similar to that of many organizations. Like others, our system is something of a “black art”. It directly and indirectly touches people within our company and outside: stockholders, the board, management, employees, customers, vendors, and even the general public.

By understanding the past and present, we can positively influence our future. It is a question of what kind of a company we will become.

I hope you will be provoked and enlightened by this research.

TABLE OF CONTENTS

MEMORANDUM i
EXECUTIVE SUMMARY ii
TABLE OF CONTENTS iii
I. BACKGROUND 1
I.1 History of Living Companies 1
I.2 Compensation Systems 1
I.3 Recent Trends and Events 2
II. THE NEED FOR CHANGE 2
III. CHANGING THE SYSTEM 3
III.1 The Study Objectives 3
III.2 What the Research Shows 3
III.3 Proposed Course of Action 5
IV. BUDGET IMPACT 6
V. CONCLUSION 6
REFERENCES 7

LIST OF FIGURES

Figure 1 - CEO PAY RATIOS vs. TIME 3
Figure 2 - CEO PAY vs AVG WORKER PAY 4

LIST OF TABLES

Table 1 – CEO PAY RATIOS BY COUNTRY 4

I. BACKGROUND

This study examines how executive compensation systems relate to a company’s performance and that company’s survivability. It describes how companies interact with their social, political, and economic contexts. Many disciplines were considered including compensation management, corporate management, corporate governance, stocks and stock options, and industrial management. Information involving direct research is covered from books and articles spanning 1997 through 2010 -- approximately thirteen years. The research behind the direct research covers more than three decades.

This background helps the reader understand three key concepts: the living company, a compensation system, and the recent history of compensation systems. It is good to begin by describing what comprises a living company. Next, elements of compensation systems are covered. Last, trends in corporate compensation systems as they pertain to executives are identified.

I.1 History of Living Companies

The best selling book on business, “The Living Company” (de Geus, 1997), considers the elements of a living organization. The author poses a primary question: “Why do so few companies survive even the lifespan of a typical human being?” What is different between a few years old company and a 500-year-old company? The author cites several characteristics that living companies have in common:

– The company is able to acquire knowledge and treat decision making as a learning experience.
– The company has an identity. That identity being the culture through which its people learn.
– The company has an ecology. Think of ecology as answering questions “like is the company tolerant”? “Does the company have a ‘corporate immune system’ to protect itself from internal and external threats”?
– The company evolves over time. The company succeeds in evolving through the nature its financing systems.

A key aspect of the company’s evolution counts on promoting power sharing. In a living company, an individual never holds too much power. This balance helps the organization survive.

I.2 Compensation Systems

Modern compensation is concerned with rewarding the company’s workers at all levels -- from it’s top executives to it’s clerks, and salesmen. These systems have been evolving over centuries. Some are simple. Some are complex. Factors such as risk taking, responsibility, and performance shape the compensation paid to a company’s employees (Chingos, 2002).

A modern company is class based. Not everyone is paid equally. It is common for executives and staff to receive greater compensation than those workers occupying lower levels of the organization – those who execute less complex tasks.

All reward systems involve base salaries and hourly wages. Sometimes health, dental care, or other benefits are provided. The extent of benefits depends partially on the company’s size, its revenue, and its profitability. In many cases formal employment agreements will specify employee compensation. These agreements can cover a variety of bonuses, the option to purchase company stock of various classes, or offer direct grants of company stock. Most executive rewards are specified by customized employment agreements.

Zoom Systems, Inc. offers these forms of reward as well as 401K retirement plans, discounted stock purchase plans, and profit sharing for all employees. Profit sharing, as its name suggests, is only paid when the company is profitable. This can be paid on a quarterly, semi-annual, or annual basis. When the company isn’t profitable these bonuses are not awarded.

I.3 Recent Trends and Events

In class societies, some simple questions invariably lurk below the surface of everyday events. Here are some of those questions: How much is compensation enough? What is a fair distribution of compensation? What constitutes excellent performance? In 2006, Bebchuk observed that the US stock market exploded in value beginning in the 1980’s.

Since then a divide has grown between the privileged and powerful and those who have considered themselves middle class. The rewards have not been shared in a pro-rata fashion. At the same time there have been numerous scandals as companies have failed financially. Some well-known companies’ have had top executives involved not just in unethical, but illegal activities. In some cases, top executives have been successfully prosecuted and jailed. Examples are the cases involving Enron and Anderson Consulting (Nakayama, 2002).

II. THE NEED FOR CHANGE

A cornerstone of American capitalism is the practice of rewarding the best performing executives and employees for helping the company gain market share, create imaginative products and services, and become more safe, secure, and successful.

Global economic turmoil has raised doubts about the wisdom of providing top executives with golden parachutes, extraordinary salaries, and benefits that seem at odds with the goals of shareholders and average employees. US taxpayers have become involved since the US government has bailed out many failing private companies in finance, banking, insurance, and automobile making. The shareholders lose wealth, the board seems oblivious, workers are laid off. Executives escape with incredible rewards whether they succeed or not. The office of “Pay Czar” was created to oversee executive compensation for these bailed-out industries (Solomon, 2009).

What is good for Zoom is good for our stockholders, middle managers, workers, and customers. A clear problem arises when a company is perceived as unfair. It leads to shareholder disappointment, falling morale, and eventually company decline (Hennigan, 2005).

III. CHANGING THE SYSTEM

A great deal of information is available to help us comprehend the emerging problems. How to find the right balance to improve our compensation system in the face of the problems?

III.1 The Study Objectives

The hypothesis under test is whether trends in executive compensation threaten our company’s long-term survivability? If so, what changes can be made to improve Zoom’s chances of survival?

III.2 What the Research Shows

Class struggle was prominent in the early 20th century. The struggle receded during the prosperous post 1945 era. Class warfare has been revived, though, because of eroding prosperity.

Between 1996 and 1997, US CEO total compentation increased by 35% (Hurtt, 2000). In 1997, the difference between CEO salaries and that of the a factory worker was 326 times. By 2003, that difference was more than still more than 300 times. These are estimates. The current levels may exceed 500 times (Bebchuk, 2004). Hennigan’s 2005 graphs and tables are included here to provide insight. Figure 1-1 displays a graph of CEO pay ratios between 1980 and 2003.
[pic]
CEO and Worker Pay: Average hourly worker to CEO pay ratios –
Source: AFL-CIO: Business Week and United for a Fair Economy

Figure 1 - CEO PAY RATIOS vs. TIME

Consider CEO pay in absolute dollars compared with an average worker. Figure 2 shows the trend in CEO compensation over time compared to average worker pay. It is easy to see the enormous gap between worker rewards. Average worker compensation stayed flat, while executive compensation vastly increased.

[pic]
Source: AFL-CIO - Emmanuel Saez, University of California, Berkeley, Department of Economics

Figure 2 - CEO PAY vs AVG WORKER PAY

Hennigan’s (2005) article explains that the US (300+) ratio is a larger discrepancy than many third world countries such as Malaysia (47) and Mexico (45). This is shown in Table 1. Among developed countries such as Australia (22), Germany (11), and Japan (10), wage ratios fall far below those estimated in the US.

Table 1 – CEO PAY RATIOS BY COUNTRY

|Country |CEO compensation as a multiple | |Country |CEO compensation as a multiple of|
| |of average employee | | |average employee compensation |
| |compensation | | | |
|Brazil |57 | |China (Shanghai) |21 |
|Venezuela |54 | |Belgium |19 |
|South Africa |51 | |Italy |19 |
|Argentina |48 | |Spain |18 |
|Malaysia |47 | |New Zealand |16 |
|Mexico |45 | |France |16 |
|Hong Kong |38 | |Taiwan |15 |
|Singapore |37 | |Sweden |14 |
|Thailand |23 | |Germany |11 |
|Britain |22 | |South Korea |11 |
|Australia |22 | |Switzerland |11 |
|Netherlands |22 | |Japan |10 |
|Canada |21 | |- |- |

The table estimates came from the firm Towers Perrin dated Apr. 1, 2000. For the purpose of calculations, an average employee was assumed to work in an industrial company that generated about $500 million in annual sales.

Regardless of the country, the inequalities in reward strongly correlated with a sense of distrust between the general population and business executives.

Hennigan’s article (2005) pointed to a 2002 study conducted by Australian researchers who concluded that optimum performance was found when the top executive versus average worker reward ratio ranged between 17 and 24. They claimed that worldwide, as executive pay increased, company performance decreased. The article concluded there is no relationship between enormous pay and company performance. French and German CEO’s are paid much less than their American counterparts yet their companies’ productivity is 20% higher. There is a belief that performance of US executives is as attributable to luck as much as competence (Hennigan, 2004).

Arguments have been made that Goldman Sachs’ executives deserve the large performance bonuses for their 2009 performance (Harper, 2010). The CEO himself received a $9M bonus and 2009 was the second most profitable year in Goldman’s history. Just the same, the CEO grudgingly accepted what he considered half of the pay he deserved. Why did he accept lesser compensation? It appears the company sought to pacify public outrage and resentment because Goldman took advantage of a bailout package that was arranged at taxpayer expense. A strong element of rationalization is in play.

III.3 Proposed Course of Action

Zoom Systems difference of pay ratio is about 30 times. Bonus compensation is about a three times difference between top and median salaries. Retirement benefits are not an issue at Zoom because the company matches all individual 401K contributions regardless of a worker’s function.
Therefore, the board should adopt a policy that neither modifies our profit sharing plan, nor our matching 401K contributions.
But this is the optimal time to limit base salary inequality across all pay grades. The difference between executive and average workers should never exceed 25 times. During the initial implementation period (2 years), executives should not receive salary increases until the other pay grades catch up.
Top executives affected by cost of living due to the proposed base salary changes could be provided with equivalent stock grants for 2 years to encourage them to stay with the company and think longer term.
Profit sharing bonuses should be based upon goals being met or exceeded using a combination of profit before taxes (PBT), return on investment (ROI), and earnings per share (EPS). The weighting of these metrics should be determined by the Finance Committee and approved by the Board of Directors. Profit sharing nor other bonuses should ever be paid while the company is not profitable. Profit sharing should only be paid semi-annually to strike a balance between the short and long term interests of the company.

IV. BUDGET IMPACT

There is relatively small budget impact for the company to implement the proposal.

The greatest short term risk is the loss a few executives. We are fortunate to have a large cadre of competent individuals who deserve inside promotions. The new plan should attract new executives who will be more aligned with long-term total company performance.

Legal fees may be incurred to adjust some of the existing executive employment agreements, but the estimated cost is less than $300K.

Additional HR and Accounting cost will be needed to cover initial administrative cost for implementation and tracking. The estimated cost will not to exceed $50K in the first two years. This cost will be recouped through salary freezes and improvement in company operating profitability.

Funds will be set aside to buy back stock to compensate current executives affected by the new plan. Given the current price of the stock, this should not exceed $2M.

The proposal does not reduce payment to anyone but freezes the top-executives’ base salary until re-balance has been achieved. The most affected individuals also happen to be significant stockholders. As the stock value and dividends grow, so will these executives wealth.

The proposal basically redirects future profits into three areas: stockholder dividends, company reinvestment, and a more fair distribution of base salary and profit sharing. More analysis will be performed and the results tracked so the system can be adjusted as needed.

V. CONCLUSION

Given what the research tells us, what the likely morale benefits are, how this should position the company for better profitability and valuation, and the improved likelihood that we will ultimately survive as a 500+ year old organization, some re-balancing is needed.

I urge everyone in Zoom Systems, Inc. to embrace this proposal and preserve our company as a great place to work.

REFERENCES

Bebchuk, L. & Fried, J (2004). Pay without Performance: The Unfulfilled Promise of Executive Compensation, Cambridge: Harvard University Press.

Chingos, P. (2002). Paying for Performance: A Guide to Compensation Management, New York: John Wiley & Sons, Inc.

de Geus, A. (2002). The Living Company, Cambridge: Harvard Review.
Harper, C. & Moore, M. (2010) Goldman Sachs’s Blankfein Receives $9 Million Bonus for 2009. Bloomberg Businessweek February 06, 2010. Retrieved May 16, 2010 from http://www.businessweek.com/news/2010-02-06/goldman-sachs-s-blankfein-receives-9-million-bonus-for-2009.html
Hennigan, M. (2004). The Gekko Doctrine-Fair Pay in an Age of Greed. Finfacts Ireland Business Review Portal – Commentary. Retrieved on May 6, 2010 from http://www.finfacts.com/comment/comment9.htm.

Hennigan, M. (2005), Executive Pay and Inequality in the Winner-take-all Society.
Finfacts Ireland Business Review Portal - Article. Retrieved May 8, 2010 from http://www.finfacts.com/irelandbusinessnews/publish/article_10002825.shtml.

Hurtt, D., Kreuze, J., & Langsam, S. (2000, Spring). CEO Compensation, Performance Variables, and Socially Responsible Investing, American Journal of Business, Ball State University (15, 1). Retrieved May 8, 2010 from http://www.bsu.edu/mcobwin/majb/?p=290.

McClure, B. (2010). Lifting the Lid On CEO Compensation. Retrieved May 9, 2010 from Investopedia. http://www.investopedia.com/articles/stocks/04/111704.asp.

Nakayama, A. (2002). Lessons from the Enron Scandal. Retrieved May10, 2010 from http://www.scu.edu/ethics/publications/ethicalperspectives/enronlessons.html.

Solomon, D. (2009, October 6). Pay Czar Targets Salary Cuts. Online Wall Street Journal. Retrieved May 12, 2010 from http://online.wsj.com/article/SB125478783753066235.html.

What Beer Drinkers Drink When They'Re Not Drinking Beer

1. Evaluate O'Doul's positioning strategy. Is it wise, given the flat market for the overall beer industry?
In my opinion O'Doul's positioning strategy is very good for all beer company around the world and Anheuser-Busch Cos Inc itself. They can distinctive big idea in mind of the target market at the right time and place.
The company focuses on customer's need and wants, at the same time give the priority to legal constraint. In this case customer's or beer drinker's need to drink beer for it taste, join the fun, apart of heritage and culture. At the same time beer drinker want to avoid the cost associated with overindulge. Anheuser-Busch Cos Inc produce O'Doul's not to replace the alcoholic beer with nonalcoholic beer, their just want to do application and user positioning for company to give focuses and satisfy customer with their drinking dilemma. It show's that company also care about the legal constraint.
Their also make attribute positioning, with Anheuser-Busch Cos Inc promotes O'Doul's with its highly successful Budweiser brand. This image from a best beer producer occupy as a unique place in mind of nonalcoholic beer drinker's as positioning bases to the mind of prospect such as "What beer drinkers drink when they're not drinking beer".
Their positioning strategy look successful because O'Doul's market shares growth positively and closing the gap in second place in nonalcoholic beer share market.

Yes, it wise to give the flat market with overall beer industry because, it shows that Anheuser-Busch Cos Inc. (Company also produce many kind of alcoholic beer) also care about stricter legal constraints against drinking and driving. In other word it promotes their company name and product to suite consumer behavior trends, and give some opportunity to steal overall sales market from competition. Anheuser-Busch Cos Inc. produce O'Doul's not to replace alcoholic beer which the major sales volume for them, it is one way to influencing customer buying decision in psychological factors that affected by social forces outside the individual and create choice to have a brand loyalty customer.
In fact, their successful positioning strategy had disappointed some nonalcoholic beer manufacture that hoped to appeal to nondrinkers as one way to increase sales (Competitor use wrong positioning strategy).
2. How would you define O'Doul's target segment? Be sure to include the base or bases used to define that segment?
O'Doul's target segmentation is beer drinkers because they find that nearly all nonalcoholic beer drinkers are also regular or light beer drinkers and not nondrinkers (see the chart below). This is the right target segmentation because the response to nonalcoholic beer in 1980 had failed to attract non-beer drinkers to drink beer and this only minority group in the market.

Consumer Behavioral Segmentation

Base on diagram, The O'Doul's market segmentation should define as behavioral segmentation that divided customer into group on basis attitudes towards beer drinkers and non-beer drinkers. O'Doul's nonalcoholic beer target segmentation is single segment concentration on alcoholic beer drinker. They try to achieve strong market position due to their greater knowledge, nearly all nonalcoholic beer drinkers are also regular and light alcoholic beer drinker. Furthermore, in 1991 nonalcoholic segment grew 32 percent is opportunity for them to have the right target segmentation and they also know that nonalcoholic beer can't attract non-beer drinkers.
Anheuser-Busch Cos Inc. that produce O'Doul's also have better knowledge in this beer segmentation need due to their reputation as Bavarian brewery since 1852 and the customer need to stricter legal constraints against drinking and drive. They also can operate in economies of scale through its production, distribution, and promotion because they are already in this beer market.

3. How does this segmentation strategy satisfy the criteria for effective segmentation?
These segmentation strategies satisfy the criteria for effective segmentation by positioning its brand to appropriate usage segment, and has closed in lead competitor in fast-growing segment of slow-growth industry.
O'Doul's beer segmentation strategy not just to sell nonalcoholic beer, they seek benefit or solutions for alcoholic beer drinkers by understanding customer better such as their legal constraint.

5 effective O'Doul's segmentation criteria as below:
a. Measurable - The size, purchasing power and characteristics of segmentation can easily be done because they already in that market. O'Doul's also can be categorized as consumable product that can easily investigate the measurable thing by doing market research.
b. Accessibility – O'Doul's product also can reach intended target segments efficiently thru' marketing communication and distribution strategies because it same segmentation as product sold before.
c. Substantial – O'Doul's segmentation (alcoholic beer drinker) are large and profit potential for all beer drinkers to avoid drinking alcohol when the occasion call for sobriety, yet still wish to enjoy beer and avoid the costs associated with overindulging.
d. Durability – As long these social pressures against drinking and driving make consumers in dilemma, O'Doul's can't be disappear from the market.
e. Differential responsiveness – O'Doul's is a beer with nonalcoholic, forever this beer conceptually distinguishable from alcoholic beer in legal all around the world.
This 5 strong criteria make O'Doul's still been produce until today in the market. Company had positioning the brand in a right target segmentation to satisfy customers need and want, but still meeting the organization objective.

Good Corporate Governance-Its Importance For Banks And Challenges

Definition
Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the goals for which the corporation is governed. The principal players are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large. Corporate governance is a multi-faceted subject. An important theme of corporate governance deals with issues of accountability and fiduciary duty, essentially advocating the implementation of policies and mechanisms to ensure good behavior and protect shareholders. Another key focus is the economic efficiency view, through which the corporate governance system should aim to optimize economic results, with a strong emphasis on shareholders welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view, which calls for more attention and accountability to players other than the shareholders (e.g.: the employees or the environment).

Relevant rules include applicable laws of the land as well as internal rules of a corporation. Relationships include those between all related parties, the most important of which are the owners, managers, directors of the board, regulatory authorities and to a lesser extent employees and the community at large. Systems and processes deal with matters such as delegation of authority. The corporate governance structure specifies the rules and procedures for making decisions on corporate affairs. It also provides the structure through which the company objectives are set, as well as the means of attaining and monitoring the performance of those objectives.

Corporate governance is used to monitor whether outcomes are in accordance with plans and to motivate the organization to be more fully informed in order to maintain or alter organizational activity. Corporate governance is the mechanism by which individuals are motivated to align their actual behaviors with the overall participants.

How do we define “good” corporate governance?

Good corporate governance is about compliance and performance. Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the company and shareholders and should facilitate effective monitoring, thereby encouraging firms to use resources more efficiently. Studies have found that firms with better corporate governance characteristics tend to perform better. Stock returns of firms with “good” corporate governance practices are significantly greater than returns for firms with “bad” corporate governance practices. It also reduces expropriation of corporate resources by managers and lenders and investors are more willing to provide funds leading to lower costs of capital. Good corporate governance can be pointed as:
• Board members act in the best interest of shareholders.
• The company acts in a lawful and ethical manner in all their dealings.
• All shareholders have the same right to participate in company governance and are treated fairly by the Board and management.
• The board and committees act independently of management
• All relevant company information is provided in a timely manner

Objective of the good corporate governance

The primary objective of sound corporate governance is to contribute to improved corporate performance and accountability in creating long term shareholder value.

Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and accessible and encouraging shareholders to participate in general meetings.

Accountability: Accountability is a key objective of good governance. Not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders. In general an organization or an institution is accountable to those who will be affected by its decisions or actions. Accountability cannot be enforced without transparency and the rule of law. In reality, the civil society must prevent itself from getting accustomed to poor governance.

Interests of other stakeholders: Organizations should recognize that they have legal and other obligations to all legitimate stakeholders.

Role and responsibilities of the board: The board needs a range of skills and understanding to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors. The key roles of chairperson and CEO should not be held by the same person.

Integrity and ethical behavior: Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that systemic reliance on integrity and ethics is bound to eventual failure. Because of this, many organizations establish Compliance and Ethics Programs to minimize the risk that the firm steps outside of ethical and legal boundaries.

Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

Responsiveness: Good governance requires that institutions and processes try to serve all take holders within a reasonable timeframe.

Consensus oriented: There are several actors and as many view points in a given society. Good governance requires mediation of the different interests in society to reach a broad consensus in society on what is in the best interest of the whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the goals of such development.

Good corporate governance objective is ensured when companies and stakeholders genuinely believe that it is in their own best interests to act ethically and to act according to best governance practices. Enforcement is important. But we have to admit that enforcement by itself will not keep bad actors out of the theatre. We will sometimes observe that some actors are bad, only after they have performed for some time. In the same way, there cannot be a set of laws or regulations that are complete in every way so as to be able to deal with every risk prevalent in the market. Many are the instances where market participants, especially those driven by short term self interest, look for regulatory loopholes and lacuna to further their interest without being unduly bothered by the underlying prudence of their actions.

Importance of corporate governance in bank:

In the case of banks, regulatory limits on ownership in banks are prescribed in a number of countries to prevent banks from being controlled by a single owner or a group of connected owners. However, a majority of countries in the world still do not have such regulations. In fact, according to a World Bank survey of 157 countries in 2003, 112 did not have regulations on ownership limits. Nevertheless, in many countries, indirect regulations such as limits on related-party transactions and fit and proper tests for bank directors and executive officers are in place to promote this aspect of good Corporate Governance, and I think, regulators genuinely believe that such practices would increasingly ensure the better risk management of banks, thereby leading to a more sound system. Corporate Governance is also increasingly acknowledged as being an important instrument to address “ownership issues” as well. With the current practices that are available worldwide which can hide the identities of true owners, it is now almost impossible for regulators to only rely on ownership limits to deal with undue influence, or be assured that seemingly unrelated parties are not actually related! Consequently, markets are increasingly looking towards the application of good Corporate Governance practice to overcome any ill-effects that may arise out of ownership concentration and it is generally believed that if good governance is in place, concentrated ownership, known or unknown, may not adversely affect the risk management process of the institution.
The Banking and financial sector is easily distinguishable from the others. A few distinguishing features stand out:

• Unlike normal business entities which are funded mainly through shareholders' funds; banks' business involves funds raised mainly through deposits. The business of raising public deposits places greater fiduciary responsibilities on the institution and its managers, since depositors' funds need to be safeguarded in a special way.
• Lack of corporate governance in bank can destabilize the financial system and pose systemic risks to the real economy. Banks determine which end-users receive financial resources and provide a means of payment. They also serve as a tool for the execution of monetary policy.

• Banks need to be perceived as both accountable and credible to depositors (i.e. they need to protect themselves against reputation risks) in order to manage the potential risk of a run on bank deposits. Banks are not free from the potential risk in which they suddenly become insolvent even if their assets are sound because of their high debt- equity ratio and the difference in maturity between liabilities (most deposits are available to depositors on demand) and assets (e.g. longer term loans). Moreover, the quality of banks’ main assets (loan portfolio) is often rather opaque to outsiders compared with those of non-financial firms;

• Banks perform as financial intermediaries by lending and investing the funds mobilized and funding economic activities of others.

• Banks are the agents of the payments system where they facilitate payments domestically and internationally, through various instruments such as bank accounts, fund transfers, credit cards, etc.

• Efficient regulation is extremely important to ensure sound corporate governance of banks in general.

• Banks are able to undertake all such business operations as a result of public trust and faith in the stability and soundness of the banks in particular and the system in general. The history on bank failures in many countries indicates that loss of public confidence in banks could be contagious and could easily lead to systemic banking crisis situations.

Overall, the banking business is the key for monetary conditions in a country. Bank deposit and lending business determines the supply, cost and availability of money. Money is created by the banking system through the legal tender issued by the Central Banks and/or Monetary Authorities. Since sight money created is payable by banks at any time through legal tender and technically, the banking system does not have funds adequate for meeting all such created money at any particular point of time. Banking business thus casts a huge responsibility on the monetary authorities to facilitate, regulate, and protect the banking and payments system.

Weak Corporate Governance (CG) can contribute to financial instability and that would increase the risk profile of companies in the corporate sector and expose the banks and financial institutions to a greater risk. In a more direct sense, weaknesses in CG arrangements in banks and financial institutions reduce their capacity to identify, monitor and manage their business risk and that can result in poor quality lending and excessive risk-taking by the financial institutions. Depending on the resilience of the financial institutions and markets, these risks have the potential to spread across the wider financial system. Needless to say that inadequate CG can also lead to a poor credit culture, excessive exposure concentration, poor management of interest risk/exchange risk and inadequacies in the management of connected exposures. Some of these risks, singularly or collectively, can lead to potential insolvency and financial instability.

The role good corporate governance can play in development of financial sector and in banking sector.

Corporate Governance is now identified and acknowledged as a powerful tool to generate trust and confidence in an institution. In that context, good Corporate Governance is essentially important for banks, because such institutions (a) deal with funds raised from the public; (b) are likely to encounter greater risks including frauds and failure; and (c) if such frauds or failures occur in such institutions, it may pose issues relating to public confidence in the financial system stability itself.

All these reasons have led to Banks tending to depend upon risk management practices based on principles of prudence rather than complying with only minimum requirements.

It is also as a result of such realization that many stakeholders and regulators are now consciously looking towards good Corporate Governance, as one of the prime instruments in its overall effort to maintain financial system stability. In Sri Lanka, the CBSL has already issued a voluntary code of best practice on Corporate Governance to banks. This was prepared by a Task Force consisting of persons from the banking and financial sector. But, we now believe that the time has come for us to move towards more stringent application of Corporate Governance Codes and therefore we are now in the process of drafting and issuing a new code of best practices on Corporate Governance to be made mandatory for banks.
Corporate governance can help in the development of financial sector in general and bank in particular in the following ways:
1. Foster effective supervision and regulation to built smooth and discipline financial markets
2. Improve institutional infrastructure-which have to include standard set of laws, uniform accounting standard and effective payment system for security settlement.
3. Enhance market discipline, surveillance and corporate governance-including transparency and adequate information system to the public at large.
4. Committed in WTO, entry of foreign banks may lead to increased competition, which in turn encourages domestic banks to emulate the corporate governance practices of their foreign competitors.
5. Good corporate governance systems will allow organizations to realize their maximum productivity and efficiency minimize corruption and abuse of power, and provide a system of managerial accountability.
6. Good corporate governance reduces emerging market vulnerability to financial crises, reinforces property rights, reduces transaction costs and the cost of capital, and leads to capital market development.
7. Studies have shown that good corporate governance practices have led to significant increases in economic value added (EVA) of firms, higher productivity, and lower risk of systemic financial failures for countries.
8. Promoting policies for financial sector and enterprise development in support of economic/investment diversification
9. Banks and financial institutions obviously need effective supervision and regulation, disciplined markets and surveillance and good corporate governance practice and appropriate infrastructure developments to bear the risk of competitive market.

The regulatory mechanisms ensuring good corporate governance in banks in Nepal are:
Main Laws Relating to Corporate Governance in Nepal
Companies Act, 2006
Act Relating to Securities, 2006
Insolvency Act, 2006
Act Relating to Bank and Financial Institution, 2006

Directives and -- Relating to Corporate Governance in Nepal
Nepal Rastra Bank Corporate Governance Directives for Bank and Financial Institutions
Nepal Rastra Bank Directives on Account Policy and Financial Statement
Nepal Rastra Bank Directives on Statistics and Statement subject to be submitted to NRB
Nepal Rastra Bank Directives on Promoter Share Transfer and sell
Securities Board of Nepal, Securities Listing By-laws
Securities Board of Nepal, Securities Registration and Issuance Permit Directives

Regulatory Authorities in Nepal
Company Registrar
Nepal Rastra Bank
Securities Board of Nepal
Nepal Stock Exchange Market
Insurance Committee
Various Law Courts

Foreign Regulatory Authority
World Bank
Asian Development bank

NRB directive:
The central bank has introduced higher corporate governance standards for banks and other financial companies as part of a wider program of financial sector reform. Accounting and auditing standards are being developed. And a number of draft laws have been prepared that should deepen and accelerate the reform process if passed and implemented.
Directive 6 also requires that boards follow a code of ethics developed by the NRB. Directors of all companies are prohibited from offering bribes, engaging in corruption, trading in the shares of the company, or having any conflicts of interest on appointment—though shareholders can waive the latter requirement. Banks and other financial companies cannot make loans to their directors. The draft company law would extend this limit to all companies.
While boards may have a minority of directors seen as representing smaller shareholders, there are no formal independence requirements in the law for listed companies. Starting in 2005 banks and other financial companies are required to appoint a “professional director” from a list approved by the NRB. The draft company law would also require that all companies have one or two independent directors.
To strengthen the banking system and prevent “willful default”, the NRB has directed that the board members and significant shareholders of companies in default can be “blacklisted” by the affected bank. Those blacklisted, and companies they control, cannot borrow, and cannot serve as bank directors. While blacklisting has encouraged the recovery of distressed loans and appears to be contributing to building a culture of repayment, some market participants feel— especially given the current political and economic environment—that the list has unfairly penalized the directors and significant shareholders of companies under legitimate distress, while weakening the concept of limited liability. Recently the NRB has revised the relevant directive to provide “non-willful” defaulters with a grace period.

Assessment:
The major stumbling block for good corporate governance in Nepalese context is the lack of meritocracy corporate culture. Here, position, power and relationship matter more than quality and skills of the people. People’s contribution in the organization is not evaluated objectively. The top management prefers personal favor and undue respect from their employees rather than performance. Corporate power and politics that favor and value more to the mediocre and subservient people is very much prevalent in most of the Nepalese organizations. And, this is here to stay as most of the people who have managed to climb the ladder by applying such means do not and cannot bring about positive charges. This apparently prevents practicing good corporate governance.
While the lack of good corporate governance in Nepal is a known phenomenon, there are of late certain efforts being made in this direction. Nepal Rastra Bank, the central bank of the country has recently issued a directive related to Good Corporate Governance to Commercial Banks. The directive has spelt out the details of dos and dont’s to ensure good corporate governance in the banking sector. While this is certainly a welcome and timely step taken by this government body, this is not enough. What is more important is that NRB itself should first epitomize this before it asks others to do the same. And, equally important thing is to have an effective and strong monitoring system to ensure effective implementation of the directives.
Nepal has initiated corporate governance reform in the financial sector and draft legislation has been prepared to spread reform to other companies. Fully tapping the potential of capital markets and professionalizing boards and management will require this legislation be passed and implemented and overall reform efforts continue. Good corporate governance ensures that companies use their resources more efficiently and leads to better relations with workers, creditors, and other stakeholders. It is an important prerequisite for attracting the patient capital needed for sustained long-term economic growth.
The challenges with regard to formulation and/or enforcing good corporate governance rules
Over the past few decades, the activities in the field of banking have been increasing rapidly and today a large number of new areas have been added to the traditional list of services provided by Banks. An examination of such lists would clearly indicate that Banks of today are performing many services that were hitherto provided by other service providers. We now see that the conventional difference between banking and other financial businesses, i.e., insurance and securities trading, has almost disappeared. In the meantime, the rapid development of debt securities markets too, has been posing new challenges to the traditional intermediation business of banks. All this has blurred the customary boundaries and there are many overlaps that have been created. Naturally these trends lead to new challenges to the Regulators of banks who now have to deal with these new multi-faceted conglomerates, instead of the traditional deposit taking/money lending institutions that were once-upon-a-time called “bank”. Therefore, today, a need has surfaced where several regulators are compelled to act as a group to undertake consolidated supervision of the financial institutions, especially financial conglomerates, and this is becoming increasingly common. Regulators now tend to enter into MOUs to share information under the current legal provisions, and they also have periodical meetings, sometimes in the form of financial system stability committees or as inter-regulatory institutions committees to assess potential systemic risks/crises and to develop crisis prevention and resolution measures. In fact, in some countries, Regulators now develop common tools to conduct financial “fire drills” to prepare for possible failures of large financial institutions, and such practices include various simulation techniques as well.

That is not all. The Regulators’ work has become even more complex due to the rapid internationalization of the banking system. Internationalization could take place in two ways: through ownership or business operations. “Ownership” involves international investors and/or international banks acquiring banks in other countries. Banking “business operations” gets internationalized through the use of modern IT where geographical boundaries and country regulatory boundaries are no longer applicable and it becomes increasingly difficult to identify a single particular location as being the operative area in respect of certain financial transactions. Modern IT and financial liberalization are the keys that have led to this type of banking internationalization. At the same time, it has provided for innovative electronic money and scripless settlements systems for cross-border financial transactions. Financial liberalization is now leading to banking internationalization where surplus funds flow cross-border to finance deficit units, i.e., international intermediation. In this background, it is now realized by Regulations that the high mobility of capital flows creates enormous risks to internationalized banks and to international systems, if the individual fund management systems of such banks are not sound. This requires Regulators to place even greater weight upon the efficacy of the governance systems since the failure of such institutions could be catastrophic to the well being of the entire global financial systems. In addition, the ill effects of money laundering, financing of illegal activities, and the financing of terrorism through the banking system are further risks that are faced by banks due to this growing internationalization. These too, need to be addressed by stakeholders who are involved in the development of the evolving systems. To deal with these challenges, Regulators now have to close ranks internationally as well, and attempt to harmonize prudential requirements to monitor risks of international financial conglomerates, and in this regard, we all must be somewhat relieved that the Basel capital accord has provided a clear framework for us to apply on the subject.

Corporate Governance for banks and financial institutions covers 8 principles. These are:

Principle 1: Board members should be qualified for their positions, have a clear understanding of their role in Corporate Governance and be able to exercise sound judgment about the affairs of the bank.

Principle 2: The board of directors should approve and oversee the bank’s strategic objectives and corporate values that are communicated throughout the banking organization.

Principle 3: The board of directors should set and enforce clear lines of responsibility and accountability through the organization.

Principle 4: The board should ensure that there is appropriate oversight by senior management consistent with board policy.

Principle 5: The board and senior management should effectively utilize the work conducted by the internal audit function, external auditors, and internal control functions.

Principle 6: The board should ensure that compensation policies and practices are consistent with the bank’s corporate culture, long-term objectives and strategy, and control environment.

Principle 7: The bank should be governed in a transparent manner.

Principle 8: The board and senior management should understand the bank’s operational structure, including where the bank operates in jurisdictions, those that may impede transparency (i.e. “know-your-structure”).

It is very clear today, more than ever, that Regulators also have a key role to play in achieving good Corporate Governance. In general, all regulations, in the Banking System, are intended in one way or another, to enforce prudential requirements on key areas of affairs of institutions to mitigate identified risks. Regulations on ownership, related party transactions, fitness and propriety tests for directors are directly based on modern Corporate Governance principles. However, the Basel Committee goes further and describes the role of supervisors in Corporate Governance by adding new parameters as well. These are:

Supervisors should provide guidance to banks on sound Corporate Governance and the pro-active practices that should be in place.

Supervisors should consider Corporate Governance as one element of depositor protection.

Supervisors should determine whether the bank has adopted and effectively implemented sound Corporate Governance policies and practices.

Supervisors should assess the quality of banks’ audit and control functions.

Supervisors should evaluate the effects of the bank’s group structure.

Supervisors should bring to the board of directors’ and management’s attention, problems that they detect through their supervisory efforts.

According to Basel recommendations, Corporate Governance should be promoted by other stakeholders as well. For instance,

Shareholders – through the active and informed exercise of shareholder rights;

Depositors and other customers – by not conducting business with banks that are operated in an unsound manner;

Auditors – through a well-established and qualified audit profession, audit standards and communications to boards of directors, senior management and supervisors;

Banking industry associations – through initiatives related to voluntary industry principles and agreement on and publication of sound practices;

Professional risk advisory firms and consultancies – through assisting banks in implementing sound Corporate Governance practices;

Governments – through laws, regulations, enforcement and an effective judicial framework;

Credit rating agencies – through review and assessment of the impact of Corporate Governance practices on a bank’s risk profile;

Securities regulators, stock exchanges and other self-regulatory organizations – through disclosure and listing requirements; and

Employees – through communication of concerns regarding illegal or unethical practices or other Corporate Governance weaknesses.

In a broader sense, mandating the banks and financial institutions to adhere to full disclosures of their operations would not only allow the markets, investors, depositors and others to keep a close watch on the financial institutions, but also provide an opportunity for other regulators also to be closely involved in supervising these institutions. For example, listed banks and financial institutions are not only under the supervisory arm of the Central Banks, but also the Securities & Exchange Commissions. In multi-regulatory and multi-supervisory systems like what is still prevalent in our part of the world, it is necessary to ensure that the regulatory and supervisory burden be shared by all who are responsible for regulating and supervising banking and financial institutions. This will also provide an opportunity to mitigate concentration of regulatory risks. In multi-regulatory regimes, it is particularly relevant to ensure that appropriate CG principles are laid down, so that all regulators are aware of the principles behind these governance rules that are introduced in the interest of the wider financial system stability.

In promoting sound CG, it is also necessary to develop an effective legal framework that specifies the rights and obligations of the institution, be it a bank or a finance company or other, its directors, shareholders and other stakeholders. The regulators, on their part, should initiate action to build capacity in CG at various levels, including the chairmen, the boards of directors and senior management of banks and financial institutions. The legal framework should also provide for disclosure requirements, facilitating the enforcement of the law.

Further, it is essential to encourage an effective financial news media, which deals with the importance of CG and educate the public. They should play a more responsible role in disseminating accurate information to the public and initiating a meaningful discussion on the subject.

Conclusion
The developments in Corporate Governance that are taking place all over the world are increasingly complex. It is almost impossible for those who are not undertaking full-time studies on the subject to keep pace with these developments. Yet, all of us who are interested in systems that stimulate business and keep the wheels of economies moving at a rapid space, would continue to have a strong interest in the subject. I am also hopeful that, the banking and financial community will continue to promote and foster these studies and practices since these provide the lubrication for the smooth functioning of our complicated financial systems in our ever-changing corporate regimes.

We also know that a large portion of global business is in the banking sector. In addition, all business entities, maintain direct relationships with banks and financial institutions. In that context, the pre-eminent position that is applicable to the banks and enjoyed by them cannot be over-emphasized or under-estimated. Therefore, our efforts to enhance the governance capabilities and capacities within banks and financial institutions have to be at the forefront of our agendas. The trend in the world of targeting governance practices in the banking and financial sector to be at the cutting edge of prevailing practices worldwide is a significant step in the right direction and should continue to be so in the future as well.

Monday, May 16, 2011

Affirmative Action: Keeping Minorities Down For 30 Years.

The subject of affirmative action in college admissions has been hotly debated since its inception. Although affirmative action was originally supported by the vast majority, that same majority is now starting to wonder if there is a better way. Commonly asked questions include: "Is affirmative action still working?" and "Is there an alternative?" The answers to each of these questions will provide insurmountable evidence that affirmative action in college admissions no longer fulfills its intended purpose and that the only viable alternative is to focus more attention on primary schooling for the underprivileged.
The most common question that arises in contemporary debates over affirmative action is, "Does affirmative action still work as intended?" The original purpose of affirmative action in college admissions was to eliminate racial bias in the applicant selection process and provide a helping hand to disadvantaged minority students. Has this happened? The simple answer is "No", but a more precise answer requires more elaboration. Richard Rodriguez, the Mexican-American author of Hunger of Memory and a direct beneficiary of early affirmative action policies, puts it this way, "I think – as I thought in 1967 – that the black civil rights leaders were correct: Higher education was not, nor is it yet, accessible to many black Americans" (Rodriguez 144).
In 1967, civil rights leaders of all types began to pressure universities and colleges all over the United States to admit more minority students and hire more minority teachers. They claimed that racial bias was the nefarious culprit responsible for the low numbers of non-white students and teachers at these institutions and that these low numbers were unrepresentative of the surrounding populations. Affirmative action policies were born in a drive to better represent minorities in institutional America.
However, all has not gone according to plan. In an effort to avoid the label of Racist, colleges and universities sometimes give preferential treatment to minority applicants. This preferential treatment means that promising majority (white) applicants are often passed over for less promising minority applicants. The term Reverse Discrimination has been applied to this phenomena and the flaws of affirmative action policies have become apparent. "Most folks today, with unintended irony, mean by ‘affirmative action' that very preference by skin color that affirmative action was devised to eradicate," as Carl Cohen states in his article "Affirmative Action in Admissions Harms College Students." The article "Affirmative Action is Racist," by K.L. Billingsley, goes a step further and says, " . . . there are three kinds of racism: the David Duke and Adolf Hitler brand based on hatred, the Archie Bunker strain based on ignorance, and, last but not least, the racial bigotry born of patronization." By its very nature of benefiting one race over another, affirmative action failed in its primary goal of eliminating racism in college admissions. Additionally, affirmative action policies also failed the secondary goal of providing a helping hand to disadvantaged minority students. Some will point to the increased numbers of minority students as evidence to the contrary, but does increased representation of the disadvantaged mean that they are any less disadvantaged? Not at all, there are simply more minorities present. Richard Rodriguez describes the influx of disadvantaged students to university life like this, "Cruelly, callously, admissions committees agreed to overlook serious academic deficiency. I knew students in college then barely able to read, students unable to grasp the function of a sentence" (Rodriguez 154). Affirmative action policies are guaranteeing the college experience for students that are ill-equipped to reap the full benefits from it. Even if help can be provided to those that need it, is it right to do so?
The simple statement that minority students in general need additional assistance above and beyond the assistance given to majority students, is an endorsement for the inferiority of minority students. "The underlying philosophy behind affirmative action is the notion that blacks and Hispanics aren't that smart and aren't prepared" (Billingsley). Ruling that minority races are intrinsically disadvantaged and thereby deserving of majority help is another way of stating that minority races are less than the majority races. This is the "racial bigotry born of patronization" that Billingsley spoke of. No race should automatically start out as less than any other.
The majority desire to aid the lesser races in this way robs these minority races from their own greatness as well. "It demeans true minority achievement; i.e. success is labeled as a result of affirmative action rather than hard work and ability" (Messerli). Any academic success by a minority is now scrutinized and judged to be the result of affirmative action or not. The minority student in question may never know what the final determining factor of his or her own achievement is. In our society, it is now a simple thing to claim that a minority student was accepted to a university because of his minority status rather than her merit. Richard Rodriguez even validates this with the comment, "When I sought admission to graduate schools, when I applied for fellowships and my summer study grants, when I needed a teaching assistantship, my Spanish surname or the dark mark in the space indicating my race – ‘check one' – nearly always got me whatever I asked for" (Rodriguez 143).
Yet another way in which affirmative action harms rather than helps the minority student is the way it "lowers standards of accountability needed to push students to perform better" (Messerli). By requiring less achievement (GPA or SAT scores) from a minority student in order for that student to gain the same reward (college admission), the minority student is taught that 100% effort is not required. This fosters lazy behavior in minority students and less desire to achieve full potential. Why bother if full potential is not required? "If a minority student can get into Harvard with a 3.2 grade-point average, why should she push herself to get a 4.0?" (Messerli). This could easily create a self-perpetuating cycle of underachievement: low test scores from minorities cause schools to lower standards, lower standards cause a lack of desire to achieve, lack of desire achieve causes test scores to drop even lower, university standards drop even lower, etc.
Under the weight of the numerous flaws in the current practice of affirmative action, hope may seem lost. The reason affirmative action has failed so miserably in its quest to aid the disadvantaged is because it deals only with symptoms and not the root problem. The civil rights leaders of the 1967 noticed that minorities were unrepresented in colleges and universities. The civil rights leaders falsely determined the cause of this to be the fact that minority students were commonly at a disadvantage when it came to the entrance requirements for these institutions. The natural solution was to lower the entrance requirements for minority students in an effort to compensate. This was the natural solution but not the best solution since it dealt only with a symptom (trouble with entrance requirements) rather than the real problem.
When the original advocates for affirmative action noticed that minorities were not able to measure up to whites for entrance requirements, instead of lowering the bar for minorities they should have simply asked "Why can't minorities measure up?" The answer should be obvious. Vast numbers of minority students lacked the good early schooling necessary to get into a good college or university. "Meritocratic standards were dismissed as exclusionary. But activists should have asked why so many minority students could not meet those standards; why so many more would never be in a position to apply. The revolutionary demand would have called for a reform of primary and secondary schools" (Rodriguez 151). If the necessary education reform happened at the primary school level, disadvantaged students would no longer be disadvantaged! They would have all the advantages that the majority students have access to. Minority students with proper primary education would be able to compete with majority students and institutions would not have to lower their standards to admit them.
Greater attention must be paid to the initial rungs in our educational ladder. The recent No Child Left Behind Act is a step in the right direction; at least they are now looking in the right place! The anachronistic affirmative action policies have not fulfilled their intended purpose. Affirmative action in college admissions only treats a symptom of the disease. The solution needed now is to focus all of our efforts on improving primary schooling for the underprivileged. Referring to the above cartoon, why not give everyone the advantages of the majority instead of lowering the standards to fit the minority?

Works Cited

Billingsley, K.L. "Affirmative Action Is Racist." 1995. Opposing Viewpoints Resource Center. University Library. IUPUI, Indianapolis. 14 Nov. 2004.
Cohen, Carl. "Affirmative Action in Admissions Harms College Students." 1998. Opposing Viewpoints Resource Center. University Library. IUPUI, Indianapolis. 14 Nov. 2004. < http://galenet.galegroup.com.proxy.ulib.iupui.edu/servlet/ OVRC?vrsn=218&slb=SU&locID=iulib_iupui&srchtp=basic&c=15&ste=17&tbst=ts_basic&tab=1&txb=%2522Affirmative+Action%2522&docNum=X3010148224&fail=8192&bConts=16207>
Detroit Free Press. 2001. 14 Nov. 2004.
Messerli, Joe. "Should affirmative action policies, which give preferential treatment based on minority status, be eliminated?" 2003. BalancedPolitics.org. 14 Nov. 2004. < http://www.balancedpolitics.org/affirmative_action.htm>
Rodriguez, Richard. Hunger of Memory. New York: Bantam Books, 1983.

Thursday, May 19, 2011

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Monday, May 16, 2011

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