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IELTS Reading Practice Test

UK companies need more effective boards of directors

UK COMPANIES NEED MORE EFFECTIVE BOARDS OF DIRECTORS

A
A. After a number of serious failures of governance (that is, how they are managed at the highest level), companies in Britain, as well as elsewhere, should consider radical changes to their directors’ roles. It is clear that the role of a board director today is not an easy one. Following the 2008 financial meltdown, which resulted in a deeper and more prolonged period of economic downturn than anyone expected, the search for explanations in the many post-mortems of the crisis has meant blame has been spread far and wide. Governments, regulators, central banks and auditors have all been in the frame. The role of bank directors and management and their widely publicised failures have been extensively picked over and examined in reports, inquiries and commentaries.
B
B. The knock-on effect of this scrutiny has been to make the governance of companies in general an issue of intense public debate and has significantly increased the pressures on, and the responsibilities of, directors. At the simplest and most practical level, the time involved in fulfilling the demands of a board directorship has increased significantly, calling into question the effectiveness of the classic model of corporate governance by part-time, independent non-executive directors. Where once a board schedule may have consisted of between eight and ten meetings a year, in many companies the number of events requiring board input and decisions has dramatically risen. Furthermore, the amount of reading and preparation required for each meeting is increasing. Agendas can become overloaded and this can mean the time for constructive debate must necessarily be restricted in favour of getting through the business.
C
C. Often, board business is devolved to committees in order to cope with the workload, which may be more efficient but can mean that the board as a whole is less involved in fully addressing some of the most important issues. It is not uncommon for the audit committee meeting to last longer than the main board meeting itself. Process may take the place of discussion and be at the expense of real collaboration, so that boxes are ticked rather than issues tackled.
D
D. A radical solution, which may work for some very large companies whose businesses are extensive and complex, is the professional board, whose members would work up to three or four days a week, supported by their own dedicated staff and advisers. There are obvious risks to this and it would be important to establish clear guidelines for such a board to ensure that it did not step on the toes of management by becoming too engaged in the day-to-day running of the company. Problems of recruitment, remuneration and independence could also arise and this structure would not be appropriate for all companies. However, more professional and better-informed boards would have been particularly appropriate for banks where the executives had access to information that parttime non-executive directors lacked, leaving the latter unable to comprehend or anticipate the 2008 crash.
E
E. One of the main criticisms of boards and their directors is that they do not focus sufficiently on longer-term matters of strategy, sustainability and governance, but instead concentrate too much on short-term financial metrics. Regulatory requirements and the structure of the market encourage this behaviour. The tyranny of quarterly reporting can distort board decision-making, as directors have to ‘make the numbers’ every four months to meet the insatiable appetite of the market for more data. This serves to encourage the trading methodology of a certain kind of investor who moves in and out of a stock without engaging in constructive dialogue with the company about strategy or performance, and is simply seeking a short¬ term financial gain. This effect has been made worse by the changing profile of investors due to the globalisation of capital and the increasing use of automated trading systems. Corporate culture adapts and management teams are largely incentivised to meet financial goals.
F
F. Compensation for chief executives has become a combat zone where pitched battles between investors, management and board members are fought, often behind closed doors but increasingly frequently in the full glare of press attention. Many would argue that this is in the interest of transparency and good governance as shareholders use their muscle in the area of pay to pressure boards to remove underperforming chief executives. Their powers to vote down executive remuneration policies increased when binding votes came into force. The chair of the remuneration committee can be an exposed and lonely role, as Alison Carnwath, chair of Barclays Bank’s remuneration committee, found when she had to resign, having been roundly criticised for trying to defend the enormous bonus to be paid to the chief executive; the irony being that she was widely understood to have spoken out against it in the privacy of the committee.
G
G. The financial crisis stimulated a debate about the role and purpose of the company and a heightened awareness of corporate ethics. Trust in the corporation has been eroded and academics such as Michael Sandel, in his thoughtful and bestselling book What Money Can’t Buy, are questioning the morality of capitalism and the market economy. Boards of companies in all sectors will need to widen their perspective to encompass these issues and this may involve a realignment of corporate goals. We live in challenging times.

Paragraph A

Many external bodies being held responsible for problems

Paragraph B

The impact on companies of being subjected to close examination

Paragraph C

A risk that not all directors take part in solving major problems

Paragraph D

VIII

A proposal to change the way the board operates

Paragraph E

VII

Boards not looking far enough ahead

Paragraph F

Disputes over financial arrangements regarding senior managers

Paragraph G

III

The possible need for fundamental change in every area of business

Paragraph A

Many external bodies being held responsible for problems

ĐÁP ÁN & GIẢI THÍCH CÂU 1

Locate

Simplify & Connection

﻿ After failures﻿﻿ ,  companies﻿   ﻿should consider changes to their directors' roles   
﻿ The role of a board director today    is not easy  
﻿ Following the 2008 meltdown﻿﻿ ,  the search﻿   ﻿meant (that)    blame has been spread far and wide﻿  
  Governments, regulators, ...    be in the frame﻿  
﻿ Bank directors and their failures    have been examined﻿  
Câu  2  là thông tin phụ cho director 's roles. 
Câu  3  là hành động tiếp diễn của câu  1  khi sự đỗ lỗi lan ra xa hơn. 
Câu  4 , 5  là thông tin chi tiết của của  3 , chỉ rõ blame lan xa và rộng thế nào.

Giải thích chi tiết

Nếu chỉ scan skim mà không hiểu main idea thì dễ chọn ii. The impact on companies of being subjected to close examination ﻿(do trong đoạn có keyword “companies” và “examined”) hoặc vi. A risk that not all directors take part in solving major problems ﻿ (do trong đoạn lặp lại keyword “directors” nhiều lần). Tuy nhiên, đây chỉ là những chi tiết nhỏ chứ ko nói lên ý chính của đoạn.
Với dạng Matching Headings, Matching Information và Multiple-choice Questions, ta ưu tiên làm sau cùng vì các dạng này thường yêu cầu mình phải hiểu được main idea của 1 đoạn vì lúc này, nhờ vào lúc làm các dạng bài khác trước, ta đã nắm được kha khá main ideas của các đoạn rồi. 
﻿﻿ Áp dụng DOL’s Linearthinking (Simplify & Read connections). Ở đây DOL sẽ đưa cho mọi người Simplified version luôn (cần thì sẽ đưa thêm cả cấu trúc nha).
Read connections:
﻿ 1    After failures ,  companies   should consider changes to their directors' roles   
=> Main idea: Sau thất bại, cân nhắc vai trò giám đốc  
﻿ 2   The role of a board director today    is not easy  
=> Main idea: Chi tiết về vai trò giám đốc => giải thích thêm thôi nên có thể skip. 
﻿ 3   Following the 2008 meltdown ,  the search   meant (that)    blame has been spread far and wide  
Cấu trúc câu: Reported speech => Main idea nằm ở đằng sau cấu trúc tường thuật (sau động từ "meant")
=> Main idea: Khủng hoảng năm 2008 -> sự đổ lỗi lan rộng ra đến các tổ chức khác  
﻿ 4  ﻿  Governments, regulators, ...     be in the frame   
=> Main idea: Một loạt các tổ chức nằm trong sự đỗ lỗi đó => ví dụ cho   3  ﻿
﻿ 5    Bank directors and their failures    have been examined  
=> Main idea: Giám đốc ngân hàng, và lỗi của họ cũng bị điều tra sát sao => Tương tự   4   
Câu  2  là thông tin phụ cho  1 ﻿
Câu  3  là hành động tiếp diễn của câu  1  khi sự đỗ lỗi lan ra xa hơn. 
Câu  4 , 5  là thông tin chi tiết của của  3 , chỉ rõ blame lan xa và rộng thế nào.
=> Main idea: Sau thất bại, nhiều tổ chức bị đổ lỗi, khiến họ phải thay đổi giám đốc. 
So sánh với các headings:
=> Chọn iv - Many external bodies being held responsible﻿ for problems ﻿﻿

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