This Guest paper is an extract and summary from Enterprise Project Governance Chapter 1, by Paul Dinsmore and Luiz Rocha, published by AMACOM in the USA in 2012.
It was submitted for publication and is copyright to Paul C. Dinsmore & Luiz Rocha, © 2013
and published here September 2013

Editor's Note | Introduction | What is Enterprise Project Governance Anyway?
Use of a Comprehensive Approach | EPG and Corporate Governance
Enhance Organizational Performance | From Corporate Governance to Enterprise Project Governance

EPG and Corporate Governance

EPG evolved in part due to the cascading changes that affected overall corporate governance beginning in the 1990s. Pressures from the marketplace, governments and regulatory agencies placed a disconcerting spotlight on company boards to ensure that decisions and corresponding actions are fully traceable from the top down. Since a major part of organizational survival depends on new projects, EPG adds a measure of traceability and corresponding accountability to the basics of corporate governance.

The increasing focus on corporate governance can be traced to the stock market collapse of the late 1980s, which precipitated numerous corporate failures through the early 1990s. The concept started becoming more visible in 1999 when the Organization for Economic Co-operation and Development (OECD) released its "Principles of Corporate Governance". Since then, over 35 codes or statements of principles on corporate governance have been issued in OECD countries.

In 2001 and 2002, high profile corporate failures plagued major institutions. In the US, Enron, WorldCom, Xerox, AOL Time Warner, Tyco, and Arthur Andersen were in deep trouble. In Europe the same emerged with Ahold, Bertelsmann, Vivendi, SK Corporation, Elf-Aquitaine, Londis and Parmalat. The scandals in the US led to the refinement of existing corporate governance aimed at protecting investors by improving the accuracy and reliability of corporate disclosures. The Sarbanes-Oxley Act of 2002 (often shortened to SOX) is legislation enacted in response to protect shareholders and the general public from accounting errors and fraudulent practices in the enterprise. In the UK, in 2003, the Higgs Report zeroed in on the same critical issues.

Corporate governance emerged from the shadows of boardrooms and is in common use not just in companies but also in the public sector, charities and universities. It has become shorthand for the way an organization is run. It is classically composed of committees charged with responsibility for regulatory compliance, auditing, business risk, hiring and firing the CEO, and the administration of the board of directors' activities.

The demand of shareholders and other stakeholders for good governance is strong and continuing. The evolution of corporate governance was prompted by cycles of scandals followed by reactive corporate reforms and government regulations intended to improve the practice. Investors, unions, government and assorted pressure groups are increasingly likely to condemn businesses that fail to follow the rules of good practice.

Use of a Comprehensive Approach  Use of a Comprehensive Approach

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