Investing in ESG funds allows shareholders to support companies in transition, that wish to act and develop in a more sustainable and responsible manner. Across the board, there seems to be no end in sight to finding the perfect compensation package or philosophy for corporate executives.
Therefore, it is essential for companies to have an appropriate peer group for performance benchmarking, compensation program … Continue reading "How to design your peer group for compensation benchmarking". Request A Demo Login. Home Blog What is Corporate Governance? What is Corporate Governance? How does CGLytics help companies achieve good governance? Learn More. So here we are talking about best practice principles, for example, an integrated business management system that allows top management to communicate with and influence what is happening on the ground in line with achieving overall business goals.
Another example of best practice in governance is maintaining policies and procedures that set expectations, establish roles and responsibilities and communicate commitments to employees and its members. Governance should provide a platform that enables a balance of requirements from several groups and when done well, it provides a transparent environment for the organisation to innovate and grow. While a good governance structure is central to preventing risk and providing the right level of information to a defined set of users, it is essential in facilitating accurate, timely and effective decision making.
Not having such governance to inform management and its employees can lead an organisation away from an honest and open environment that governance sets out, which, can have severe impacts and in many cases, lead to bankruptcy. Neither the CFO, the board nor the auditors paid attention to the governing rules of accounting. It certainly makes you wonder, what else was going on?
Evidence suggests that if good governance practices were in place, the demise of such companies may have been avoided. Organisations typically battle with clearly identifying or possessing the ability to easily pivot toward their strategic initiatives making it difficult to pinpoint where they are getting the most value or where the organisation is headed. This could be due to several reasons including: lack of leadership support; visibility; or, the right measurement of activity in the relevant areas of the business.
So even if internal mechanisms like the operating model are working well, when the strategy changes, what we need to drive and focus on has changed and it means we need to revise how we operate. We now live in a world where our external environment is continuously and rapidly evolving and organisations need to adapt to the fluctuations, however, outputs of governance tend to be overlooked in informing decisions to adjust operational endeavours.
These appear to be basic concepts but surprisingly often even mature organisations fail to effectively use governance as a mechanism to inform the overall business strategy. In more recent years, successful companies have learnt to revolutionise their Operating Models to enable appropriate communication levels that include organisational knowledge, skills and relationships to rapidly engage senior decision makers.
The increasing need goes beyond the lifespan of operational initiatives to form a sustainable and continuous capability within the organisation that provides a continuous feedback loop and an opportunity, through good governance, to communicate effectively and enhance strategic decisions. In this way, organisations can continue to realise the benefits of good governance through a well-defined organisational design, enabling transparency and rapid decision making whilst also realising profitability and maintaining a competitive advantage in the market.
However, the flip side of that is that the public sector achieves innovations that have a very high level of difficulty and still manages to do it. Kay believes the more successful government agencies are filled with innovation. Another factor affecting public sector governance is how agencies work with ministers. This unique challenge can be navigated, according to Frew, through a significant intimate relationship with your ministers, often leveraged off the relationships with the bureaucracy.
She believes public sector boards can also play mentors and coaches to their shareholders, i. This is an edited version of an article that originally appeared in the July issue of B2B Magazine.
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