Help Sought for Middle-Market Companies

Amid the toughest economic climate in almost 80 years, the focus has been largely on the huge companies looking for government bailouts. Constantine Konstans, executive director of UT Dallas’ Institute for Excellence in Corporate Governance (IECG), is also concerned about what are typically known as “middle-market” companies.

“These middle-market companies,” says Konstans, an accounting professor in the UT Dallas School of Management, “generally have up to $2 billion in annual sales and are truly the backbone of the economy. Many, many of these organizations are privately held, but that doesn’t exempt them from the need to have strong corporate governance practices in place, especially in this economy.”

Transparency, accountability and truthfulness are keywords in the corporate governance world and among boards of directors and senior managers. Even companies that don’t face public stockholder concerns or government rescue dollars should be embracing these standards, Konstans says. “When directors and senior managers discipline themselves to meet these objectives, they will find that not only are they more realistic and knowledgeable about their organization’s activities, but they also have a better idea of their organization’s potential,” Konstans says.

IECG is focusing on these middle-market companies, helping leaders in these firms selectively apply the principles that govern the large multi-national corporations. The goal, Konstans says, is to bring selected best practices already in place at Fortune 500 companies to those not as large. Huron Consulting Group, a NASDAQ-listed company and newest strategic partner of IECG, will help develop and deliver a program for these directors and senior managers.

Keith Keller, a managing director with Huron, will be a part of the team developing the program. “The benefits to the middle-market companies of having strong corporate governance systems in place and in practice cannot be underestimated. Companies on track to grow will grow in the most sustainable fashion if they embrace early on the concepts of transparency, accountability and truthfulness,” Keller says.

“Really, it’s just like raising children. If a child is taught proper manners early on, the child will have those manners throughout adulthood,” says Keller, whose areas of expertise are in corporate governance, risk management, internal controls and audit. “Companies are the same way – but we call this corporate culture.”

Konstans says the program for middle-market companies will be developed in conjunction not only with Huron, but also with other IECG sponsors.

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