According to (Kurtz & Schrank, 2007), the governance model is the one that defines and describes the roles and responsibilities of the board of directors and how to make decisions between them; the governance model represents the basic rules of the relationship between the CEO and the board of directors and how this affects the system within companies.
In this paper, I will discuss the governance theory that I see fit for the Bechtel Company, then define the appropriate governance model for the company, and finally, the rationale for their selection and how they relate to each other.
Selected Theory: Stakeholder Theory:
Edward Freeman suggests in this theory that the purpose of business is to create as much value as possible for stakeholders. Executives and the Board of Directors must maintain stakeholders' interests on a continuous and balanced basis for the company to continue to operate and prosper. He argued in his theory that institutions that manage healthy relationships with stakeholders will survive longer than institutions that do not (Freeman & Reed, 1983).
Selected Model: Carver Model of Policy Governance:
In this model, the board of directors gives a high degree of confidence to the executives, but the board of directors holds periodic meetings with the executives to monitor their decisions and their impact on the activities of the institution; this model focuses on the goals of the organization, whether short or long-term. Therefore, all activities of the Board of Directors and the CEO will be towards these goals; these goals are necessary to work on the organization's growth and serve its stakeholders' interests (Carver & Carver, 2009).
Rationale for Choosing Theory:
According to (Denton, 2016), Bechtel is a family construction company run by talented people from the family and from outside; Bechtel's primary goal is sustainability and continuity in the construction market. As a strong player, the construction field relies on an interlocking sector of stakeholders; stakeholder theory relies on six principles to regulate the relationship between the board of directors and stakeholders; these principles are actually what Bechtel needs, such as the rules of continuing the administration or leaving it and the role of each individual in management, identifying stakeholders, their influence, and how to deal with them, the rules governing profit and loss and future plans that ensure the company's long-term survival and success.
Rationale for Choosing a Governance Model:
The CEO of the Bechtel Company for the past 124 years is from the Bechtel family now CEO is "Brandon Bechtel", a 39-year-old man, he is from the fifth generation of company founder "Warren A. Bechtel" (Bechtel, 2022); therefore, the Carver model, as I mentioned earlier, gives great importance to the CEO, but it does not absolve him of accountability to the Board of Directors and stakeholders, in this model, there are few committees, but the members of the board of directors have a significant commitment to the interest of the institution and its stakeholders (Carver & Carver, 2009)
Relationship of Theory to the Governance Model:
The Carver model is based on companies' ultimate goals and objectives. These goals are undoubtedly in the interest of stakeholders; otherwise, it would not have been developed and planned from the beginning. I believeTheder theory and the Carver model will work together to ensure the integrity of work between the board and stakeholders.
Conclusion
The governance model draws the final picture of what will be the head of the company from the board of directors and executives; every organization has goals and objectives that are united through a comprehensive vision of its institutional system, and what can be improved in it, governance models and theories contribute to these improvements through which risks can be anticipated. Opportunities exploited are that boards and directors must choose a suitable governance model that works according to its standards and is commensurate with its field of work.
References
Amis, J., Barney, J., Mahoney, J. T., & Wang, H. (2020). Why we need a theory of stakeholder governance—And why this is a complex problem. Academy of Management Review, 45(3), 499–503. Retrieved from EBSCO multi-search database in the TUW Library.
Bechtel. (2022). leadership, https://www.bechtel.com/about-us/leadership/
Carver, J., & Carver, M. (2009). A Carver Policy Governance Guide, The Policy Governance Model and the Role of the Board Member (Vol. 1). John Wiley & Sons.
Denton, S. (2016). The Profiteers: Bechtel and the Men Who Built the World. Simon and Schuster.
Freeman, R. E., & Reed, D. L. (1983). Stockholders and stakeholders: A new perspective on corporate governance. California Management Review, 25(3), 88-106.
Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., & De Colle, S. (2010). Stakeholder theory: The state of the art.
Kurtz, M. J., & Schrank, A. (2007). Growth and governance: Models, measures, and mechanisms. The Journal of Politics, 69(2), 538-554.