The governance disciplines of a company include:
- Stewardship: the responsibility for the performance of a company and the delivery of value to voters.
- Strategy: the beneficial positioning of a company in the market to offer value to voters over time.
- Structure: the enabler of the relationships between infrastructure, products and / or services, markets and stakeholders of a company that provide value.
Electoral districts are the common element.
Stewardship based on electoral districts:
The consistencies of a company consist of:
- Primary: employees, customers, suppliers and investors
- Secondary: regulators and competitors
- Community in general
Primary voters are directly associated with income-generating activities: employees perform, customers buy, suppliers deliver, and investors finance. Employees serve customers creating supplier demand and providing potential for investors to make a return. Secondary constituencies allow or challenge activities. Voters are individual members of a group of voters.
Employees (primary):
- Full-time and half-day
- Permanent (including leased) and temporary
The definition of employment is determined by federal immigration and federal and state labor and tax laws and regulations. They are numerous and complex.
A common law employee is a person who provides services in exchange for a salary or salary, pursuant to an oral or written contract, on an ongoing basis and under the control of a director of a company.
Corporate officers are treated as employees if they perform services and are compensated; business partners, members of limited liability companies, and sole proprietors are not treated as employees.
An independent contractor performs the work for a manager who can determine the end result, but not how the result is achieved, and it is supposed to be temporary in nature. Severe penalties can result from misclassifying employees as independent contractors. Independent contractors are businesses in their own right.
Rented employees are technically employed by a Professional Employment Organization (PEO), but the client is responsible for job control. The administrative burden of the HR function, including payroll processing, is shifted to the PEO. In effect, the employees are working for the client with an outsourced HR department. By grouping employees from multiple clients, the PEO can reduce processing costs and can earn favorable rates for insurance due to the scale effect. Clients pay fees and amounts to cover payroll, taxes and benefits directly to the PEO.
The rules regarding taxes on employment, self-employment and unemployment are complex. In some cases, independent contractors are considered statutory employees for payroll tax purposes under the Internal Revenue Code. Otherwise, they are responsible for their own payroll taxes.
Customers (main):
- Acquire “hard” products and “soft” products related to service
- Receive services at the time of product delivery
- Acquire support services
Customers can be internal or external to a company. Internally, one unit may provide products and / or services to another, or pass work in progress. For example, administrative functions are service providers for operational functions. Externally, clients can be individuals or companies. The relationship between companies is always with individuals. Therefore, a company’s reputation with its customers is highly dependent on specific individual relationships, attitudes, and behaviors that may or may not be consistent with management’s values and intentions.
Relationships with companies that consist of multiple entities and operate in multiple markets can be complex. Corporations often have subsidiaries and affiliates that are separate but related entities under a parent company structure for various business and legal reasons. A specific management team can be common to several entities or only to one. As a consequence, business practices may differ between entities within the same structure. Therefore, when establishing a customer relationship, it is important to obtain information about the exact business entity, including the legal name, especially for credit reporting purposes.
Clients enter into relationships as prospects, which are contractual or non-contractual. However, once a potential customer becomes a customer, they should always be treated as such, regardless of whether they are active or not, and unless there is a legal reason to end the relationship. An existing customer is also a prospect to market products and / or services outside of the current active relationship.
The clients of professional services companies are generally referred to as “clients.”
Providers (primary):
- Trade and professional
- Real estate
- Financial services
- Industrial associations
Since companies are customers of suppliers, the same issues apply with regard to individual relationships and multi-entity structures.
Vendor relationships can begin informally or formally through a “request for proposal” process. Very often, a relationship begins “occasionally” and then migrates to a “recurring” basis based on quality and value.
Commercial and professional suppliers deliver materials and supplies, goods and services. Commercial providers can also grant credit. Real estate services include leasing, buying and selling, and facility management. Financial service providers include commercial banks, finance companies, and insurance companies. As lenders, commercial banks and finance companies grant credit to the entities that make up the companies. Industry associations provide membership services and provide forums where company directors can discuss common topics.
Inverters (primary):
- Individuals
- Companies
Investors acquire and divest money market, debt and equity securities (including derivatives) in entities under federal and state securities laws and regulations. These laws and regulations are very strict. Investors include individuals and companies, such as venture capital firms; commercial, corporate and industrial companies; insurance companies; investment banks; and mutual and pension funds.
The United States Securities and Exchange Commission (SEC) facilitates capital formation by overseeing public and private issuers of securities and market participants such as brokers, agents, exchanges, funds, and underwriters. Investors are accredited or not under SEC regulations, which determine who can invest in private entities for which there is no market.
Bond investors are debt equity holders and equity investors are equity holders and owners. Business partners, members of limited liability companies, and sole proprietors are investors in their businesses and owners.
Regulators (secondary):
- Federal
- Express
- county
- Municipal
Regulators include national and foreign governments. Professional boards and institutes also act as regulators and may be closely linked with governments.
Regulators grant the right to do business in their jurisdictions in exchange for compliance with laws and regulations and the payment of fees and taxes. May require licenses and permits. Laws and regulations vary between jurisdictions with respect to property (situs) and physical presence (nexus).
Competitors (secondary):
- Traditional
- Not traditional
Traditional competitors consist of suppliers of similar or substitute products. Non-traditional competitors consist of new incoming suppliers of similar or substitute products and disruptive suppliers. Disruptive vendors are new or existing and introduce replacement products and / or services or new delivery systems, often using new and emerging technologies. Disruptive vendors are often responsible for paradigm shifts.
Community in general:
The community in general consists of markets where a company offers its products and / or services; obtain materials, supplies and services; has employees; or owns or rents a property. The community at large can range from local to global depending on the influence and presence of a company, from a small radius around a single physical location to the entire world.
A company can also be influenced by groups such as:
- Trade unions
- Unaffiliated industrial, commercial and political groups
- Media, including the press, radio, television, and the Internet.
- Philanthropic associations
Due to the effects of outsourcing and the Internet, companies can extend their reach from a single physical or virtual location to global markets. However, due to the effects of social media, they need to be aware of how they are perceived in local and global communities, whether they want to act or not.
District-based strategy:
The district-based strategy reduces the gap from where the company is to where it wants to be with each of its districts. The constituency-based strategy is expressed in terms of specific strategic objectives, goals, and initiatives.
District-based structure:
The district-based structure lays the foundation for efficiency through processes that are designed to serve constituencies. If processes are not designed to serve constituencies, chaos can ensue. As an employee, customer, supplier, or investor, it can be extremely annoying to move from one organizational unit to another because no one knows exactly how to solve a problem. The further a unit is from a constitution, the less likely it is to have problem-solving skills.
The “value chain” is the set of all activities that generate and add value to materials and supplies that result in finished products and / or services. The value chain links suppliers and customers, through processes carried out by employees, and with facilities and equipment financed by lenders and investors.
Understanding constituencies is an entrepreneurial competency (entrepreneurship, leadership, and management).