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Volume :14 Issue : 54 1988      Add To Cart                                                                    Download

A FIELD STUDY ON THE ROLE OF GOVERNMENT MEMBERS PARTICIPATING IN THE BOARD OF DIRECTORS OF THE KUWAITI SHAREHOLDING COMPANIES

Auther : By: Dr. Salem Al-Tuhih

 

          The Government of Kuwait participates in the capital of certain Kuwaiti Shareholding companies as an appropriate method for achieving social, economic and political objectives.  As such, the Government has representatives in the board of directors of these companies.

           This study investigates the role of these Government representatives, their effectiveness in comparison with that of private sector representatives and their ability to determine and achieve strategies.  The importance of this study stems from the fact that most previous studies on business administration have overlooked the relationship between board member representation in companies and the performance of these companies in different fields.

           A questionnaire was used in this study to gather a sample of responses from 150 members of Kuwaiti shareholding companies in three sectors: industrial, services and banking and investment.  Of the 150, 72 were Government representatives, the rest representing the private sector.  The questionnaire included three groups of questions on the appropriateness of the number of board members, the importance of each member’s educational background, the clarity of work procedures on the boards, member’s satisfaction with the procedures of decision-making, the extent to which the companies have achieved their goals in financial, social and economic fields, and finally the effectiveness of the roles of board members representing the private and public sectors.

           Analysis of responses to the questionnaires yielded certain conclusions and recommendations, among which the following are most important:

 1.      The proper number of board members ranges from five to nine, according to the company’s size and activity.

 2.      It is necessary for each member to have a minimum level of education in order to be able to perform his duties effectively, in addition to administrative experience and knowledge of the nature of the company’s activity and the country’s laws.

 3.      A difference exists between the roles performed by Government representatives and those of the private sector.  In addition, a great deal of doubt was raised about the ability if Government representatives, a matter requiring reconsideration of the method of their selection and the supervision of their work.

 4.      It is difficult to determine criteria by which to measure the extent of a company’s achievement of its social and economic goals.  For this reason profit has remained the principal measure of success.

 5.      Decision-making is carried out demographically and is based on <<middle solutions>>, with a clear dominance of the opinions of private sector representatives because of their greater skills and abilities in comparison with those of government representatives.

 6.      There is a need to establish specific criteria for selecting and appointing government representatives to board of directors and for periodic follow-up on their work.  There is a further need for a comprehensive job description covering their responsibilities and duties, the necessary skills involved and educational and other requirements, which should be met by government representatives.

 7.      Training programs in Kuwait and abroad should be provided for government representatives in order to secure the attainment of the skills necessary for maximum effectiveness on the boards of directors.

 8.      The duration of membership held by government representatives on boards of directors should be specified and that the renewal of membership should be based upon effective performance of administrative duties and effective participation in the achievement of company goals generally.

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