Conference closing session : " Quality Visions in the New Millenium"
Written by Dr. Marcos E.J. Bertin

The most successful companies in developed countries operate under board best practices codes, which include guidelines aimed at improving business management quality to ensure greater efficiency and effectiveness, integrity, accountability and transparency in corporate administration and management.
This process aimed at the voluntary adoption of corporate governance best practices has taken place in many countries over the past 20 years and to a greater extent during the 90´s. In this 21st century this tendency is gaining momentum because in today's highly competitive global markets, to have good management is essential but not enough. Organizations also need governance of outstanding quality implemented by a professional board of directors.
Over the last ten years, research in the U.S. and Europe has shown the significant influence the Board of Directors has on the results of a company.
For example, a McKinsey study with 200 institutional investors, published in November, 2000 by the Financial Times showed that:
" board practices are at least as important as financial performance when evaluating investments. Regarding emerging economies they were prepared to pay around 20% more for well governed companies. The average premium for good governance goes from 18% in the USA and Europe up to 28% in some Latin American and Asian countries "
The Organization for Economic Co-Operation and Development (OECD) and the World Bank Group agreed to co-operate in efforts to promote good corporate governance in emerging and transition economies, as requested during regular meetings of the Financial Ministers of the Western Hemisphere, by governments and private business organizations. This because good corporate governance is essential for the development of a competitive private sector that in the long term is able to attract and retain the capital needed for investment and generate better managed organizations with a significant positive impact on the economic growth and quality of life of the countries involved.
For this purpose the OECD and the World Bank organized regional Roundtables proved to be an efficient way to establish a continuous framework for policy dialogue and multilateral exchange of experiences. In 1999 the OECD published The "OECD principles of Corporate Governance", a set of corporate governance standards and guidelines to assist governments and business in their efforts to evaluate and improve corporate governance (See 1.).
Roundtable meetings are held in Asia, Eurasia, Latin America and the Russian federation. Others sites under consideration are South East Europe, China, Africa, and the Middle East.
The overall goal of the Roundtables is to assist decision makers from the private and public sector in the region in their efforts to improve corporate governance and to develop a White Paper, which in a Latin America context will formulate a policy agenda for improving corporate governance.

OCDE & WORLD BANK LATIN AMERICAN ROUNDTABLES
The first meeting of the Latin America Corporate Governance Roundtable was held in Sao Paulo, Brazil on April 26th-28th, 2000. The second meeting took place in Buenos Aires in March 28th-30th, 2001.The third will be in Mexico city in February, 2002 and the last one in Santiago, Chile, on dates to be determined.
The main objectives are:
1) Improve the understanding of present corporate governance practices in Latin America and inform the international community about progressive national and regional reform initiatives.
2) Facilitate full Latin American access to the ongoing international dialogue on corporate governance.
3) Monitor and evaluate corporate governance developments in Latin America.
4) Identify the needs, and facilitate the provision of technical assistance in the area of corporate governance.
5) In the last meeting in Santiago, Chile, issue a White paper with conclusions and recommendations to business and governments. This document is being prepared by a core member group of representatives of Latin American governments and private organizations, OECD, World Bank and the newly created Global Corporate Governance Forum. This organization was recently founded by the OECD and the World Bank with initial funds provided by the UK, Luxembourg, Netherlands, Norway, Sweden and Switzerland . The objectives are to increase awareness, build consensus, sponsor research and disseminate best practices including funding technical assistance and capacity building.

INTERNATIONAL ACADEMY FOR QUALITY (IAQ) PROJECT.
In 1996 the IAQ presented in the International Conference on Quality, in Yokohama, Japan, a first report on Quality on the Board of Directors prepared with the collaboration of Academicians Feigenbaum, Sasaoka and Bertin, as project leader and input from external board members in companies in U.S.A, Switzerland, Japan and Argentina (See 2.). Progress was made in following years ( See 3. & 4.).
In 1999, FUNDECE (Business Foundation for Quality and Excellence) created a Governance Committee and designated Academician Bertin as Chairman, with the following objectives:
1) Determine what is being done in several selected countries (U.S.A., U.K., Brazil, E.U., Canada, Japan and Mexico).
2) Assess how governance practices were introduced in the selected countries. Compare methods and application success.
3) Evaluate what should be done in Argentina. Interview incumbents (banks, pension funds, investment funds, stock market, securities and exchange commission, auditors, private and government companies CEO´s and independent board members).

A project manager was hired for this project and a final report was presented during the 2nd. OECD, World Bank Latin America Corporate Governance Roundtable in Buenos Aires, March 2001 by Acn.
sBertin as member of the core group that is preparing the White paper (see .5). More information on the conclusions of this FUNDECE-IDEA project, in Exhibit A.
Initial conclusions are modest but encouraging. They indicate that Corporate Governance is finally an established subject in the minds of all incumbents.
These are:
1. The Board's mission is to add value to the company to benefit the shareholders.
2. The Board should agree on a strategy and supervise management compliance to it.
3. It is advisable to include a minimum number of directors on the board whose judgement is fully autonomous from management and shareholders.
4. The Board shall select, supervise, motivate and reward management.
5. The Board should approve an appropriate system for management and risk control.
6. Simple mechanisms should be established to ensure homogenous and objective distribution of information. These mechanisms should be clearly explained.
A strong movement developed in Brazil, Mexico, Chile and Argentina in order to promote the voluntary implementation of Board Best Practices and the necessary minimum government regulations.
The group in Argentina will pursue discussion meetings with an increased number of incumbents and the preparation of training programs for independent professional directors. Today there are very few, but demand is still very low.

GOVERNANCE AND QUALITY
The Board processes are part of the overall business processes. The criteria for performance excellence of Boards has not yet been specifically incorporated to the National Quality Awards.
So far, Corporate Governance and Corporate Quality Governance was only mentioned in the St. Gall Management Model and St. Gall Integrated Quality Management Concept as reported by Academician Seghezzi, IAQ project leader of "Integration of Quality Management into Business Management", in February 2000.
Last March, during the Latin America Governance Roundtable in Buenos Aires, Standard & Poors presented a paper with criteria, methodology and definitions in order to measure the performance of Boards (See 6.)
What makes a good Board ? They are independent of management and well balanced in terms of experience and expertise of its members. Board members have:
* a solid formation and lengthy experience in the different areas of the administration of companies and profound knowledge of the threats and opportunities of the environment.
* clearly outlined functions and roles.
* conscience of the importance of customer loyalty and their degree of satisfaction or dissatisfaction.
* updated knowledge of regionalization and globalization of the business.
* knowledge of information technology.
* knowledge of law and finance.
* ability to work effectively in a team.
* a personality that earns the respect of peers and the Executive Management, ability to challenge Executive Management avoiding confrontation and refraining from invading their functions.
The Board must "help the executives to think". "Nose in, fingers out" is the key to the success of a Board member and defines the fundamental difference between "governance" (term used to describe Board best practices) and "management".
The Board of Directors must ask itself the following questions:
* Why does the organization exist?
* Does it fulfill the needs of the market and its customers?
* Why does the personnel work for the company?
* Why should it attract investors?
* What is its impact on the community?

Directors, in the same way as managers, must be trained. This subject is beginning to be explored as a result of research into the impact of the Board on the results of a company. For example, research proves that company reputation is one of the very few key ingredients needed to get loyal customers. The other two are product and/or service quality and price. An effective professional Board contributes with recommendations and makes sure that the executive management has adequate strategies, is taking the proper actions and getting the required results in this key area of the business.

CONCLUSION
The generalization of governance practices and its application in companies operating in emerging economies will undoubtedly be of great value to improve the competitive strength, both locally and within the complex and changing global market. Governance will be, in this decade, a key breakthrough management concept for breakthrough performance.