Posted By: Admin, 08 Jul, 2012 - 02:32 pm
A few weeks ago, we launched 'Four for the Future' the focus of our governance activity. The aim of this blog is to help all of our members and other users to help us campaign for what we believe are key components of best practice.
The first of the four principles is 'to promote a governance perspective that is wider than just compliance'. In order to be able to govern an organisation well, you need to be able to do more than just ensure that you 'stick to the rules.' The 2009 ICSA report for Sir David Walker titled 'Boardroom Behaviours' concludes that "appropriate boardroom behaviours are an essential component of best practice corporate governance." As a company or organisation, you can have all of the right systems in place but if the behaviour of your board members is too passive, confrontational or not challenging enough then it is unlikely that your organisation will survive the Black swans that present themselves from time to time. As the author Jim Collins points out in his book 'Good to Great', it is crucial to have the right people in the right places on what he refers to as being the bus. In addition to good board behaviour, it is crucial to have recruited people with the right mix of competencies and skills to be able to govern an organisation effectively. Good governance then will move us to consider efficiency, effectiveness and performance.
The second principle 'to promote a governance perspective that extends to all organisations in all sectors of activity' is key in being able to extend the reach of the message of having good governance. In the business world, the term corporate governance came to the forefront after the publication of the 1992 Cadbury Code in the wake of some major corporate scandals including the high profile cases of Polly Peck and Robert Maxwell. What this document did is codify best practice and emphasise the need for adherence to a set of guidelines in corporate institutions. However, what we now have in a era where the public rightly demand openness and transparency is the need for the message of good governance to transcend the border from private to public and third sectors with the same level of emphasis. Although there have not been as high profile failures in the public or third sector which have directly been attributed to governance failure it is clear that there have been many cases. The current political emphasis has meant the quasi public sector / third sector are expected to be able to govern themselves in a era of co-regulation as opposed to direct regulation. Heath care moving from the NHS to foundation trusts, housing associations expected to have greater direct governance and schools to become academies. Governance is truly a feature of every type of organisation, large and small and in every sector.
Professionals that work in the area of compliance, risk, board development or the legal secretary role share a common core discipline. All are impacted by or impact the corporate governance role. This third principle 'to promote the role of the governance practitioner (GP) committed to effective and ethical best practice' is a thread that runs through all of the four for the future. The role of the GP is to be recognised and respected at all levels in the organisation and they themselves practice and promote the highest of standards. Without ethical consideration, good governance will never happen. Good governance is, after all, about the ethical and moral standard by which decisions are made and executed. Governance principles should be followed in order to ensure that actions taken are in line with those set out in law but also that take into account the need of the stake/shareholders and also are undertaken in the best interests of the company and not for individual gain. In addition to this, we encourage those we work with to have a good understanding of the legal and social aspects that influences their work as board members and leaders within organisations.
Finally and maybe most importantly in order for the message of corporate governance to become an inherent part of society, the fourth principle emphasises the need to 'promote the development of governance principles and practice by investing in the next generation of leaders'. At the top of many organisations now, i.e. boardroom tables there are many young voices and views missing. However, most innovation and diversity of thinking within organisations comes from the vision of young people. Graduates and those wishing to pursue their continuing professional development must be engulfed in the process of making governance an integral part of their working life and supported and encouraged to contribute within the existing structures. There is much scope for leadership and mentoring programmes and initiatives that can engage young people to be developed. The last few years have been filled with scandal after scandal with leaders and public figures showing that governance has not been a priority over personal gain. What we do not want to see is another generation of leaders arising whose focus is themselves and not the organisations or people to which they have committed their careers.
In your position as CEO, MD, head teacher, director, chairman or manager, you are in a place where you can make a difference in moving forward the 'Four for the Future' principles. Making small changes to ensure the message of good governance is engrained in the practice of your company or organisation could make a real difference. For example, if you are a company, why not consider sharing the principles of corporate governance with a third sector organisation via some form of corporate social responsibility initiative? If you are a head teacher with professionals on your governing body, why not ask them to invite the director of their board to meet with you and your chair of governors to exchange best practice ideas for managing meetings and monitoring board behaviour?
With the UK currently subject to mass youth unemployment and in a state of disillusionment about the value of hard work, there are copious opportunities for all sectors to engage young people in understanding and practicing good governance through voluntary and other innovative methods.
All in all, governance is a necessary function that is becoming more and not less important in the modern world. We challenge you to really consider how you can bring to life the 'Four for the Future' principles in the vision of your company or organisation and in your daily work.
Until next time!