Since the 2008 financial crisis we continue to see organisations failing, not just in terms of insolvency, but in terms of behaviour and transparency. We have witnessed the collapse of Carillion, Wonga, Cambridge Analytica, Wirecard, Bell Pottinger, 1MDB and many more.
Whilst many would argue that the issues of those listed above were around the flaws in the business models and the challenges with financial viability; one should not overlook the governance and by that I mean four key words: Leadership, Culture, Behaviour and Ethics. We have seen recently Boohoo Group PLC, having their growth and success pegged back by a lack of internal control and an inadequate governance framework.
Leadership, Culture, Behaviour and Ethics set the strategic drive for any organisation, starting with the CEO sharing the vision, the journey and how they view success. It is not just about profit and turnover growth being the key measures.
Creating a progressive culture goes to the very heart of the organisation and affects how people respond to structures, systems, processes and procedures, culminating in whole entity assurance, which is what traditional theoretical governance has historically been about.
What is Corporate Governance?
I was recently asked by some students what the word ‘Governance’ meant to me, knowing they did not want a textbook answer; it made me think long and hard. Since I first started in this profession the themes associated with traditional Governance had widened over the years, but why? The reason was simple, cause and effect.
The theoretical view of Corporate Governance is a framework system covering effective, entrepreneurial and prudent management ensuring sound stewardship of the organisation. It requires leadership from the top in setting the tone on accountability, transparency, probity and focus.
Public sentiment has shifted, and with the rising tide of regulation, the focus on environmental and social perspectives is forcing the public to question the corporate moral and behavioural alignment when in pursuit of profit. The public / potential investors will want to know:
• Does the organisation behave in a socially responsible manner when trying to meet its corporate objectives?
• Are the existing structures, processes, procedures and controls capable of meeting the growth and compliance challenges of the future?
• How successful is the organisation in communicating its awareness of the many social and political challenges of the public?
If an organisation can articulate the above well and demonstrate good strong governance, they will enhance their reputation, credibility and value.
Organisational reputation is now more important than ever, whether you are a corporate, an educational establishment or a charity. Choosing business partners carefully is also as important as the organisation’s own behaviour, as reputational damage simply by association can often be just as bad.
Who looks after your Corporate Governance?
Senior executives, directors and trustees need to ensure that they do not overlook attitude to social development or regulation.
The need for continuous oversight and monitoring of developments is why the role of the Company Secretary and governance professional, has changed. The role today is much more about board support and horizon scanning for the organisation on the emerging strategic risks and steering the organisation more proactively. It is better to deal with these demographic, technological, environmental and sustainability issues before a regulator steps in to fill that void.
This proactivity is exactly what good stewardship and good governance is about. The Company Secretary is there to support the Board, the role is primarily to aid the Chairperson to ensure the proper functioning of the board. The Company Secretary is often the best placed as they have the oversight of all that holds the organisation together to ensure the organisation and board work effectively.
Herrington Carmichael adds experience to Corporate Governance Services
Herrington Carmichael’s Corporate Governance Services have been enhanced by the arrival of Sandeep Nighoskar as a Legal Director.
Sandeep is a Chartered Accountant and Chartered Governance Professional, providing governance, risk and compliance support to boards ranging from corporates, charities and the education sector.
Sandeep heads up the firm’s Company Secretarial and Corporate Governance Services. He also leads a newly launched Governance Consultancy service offering, which provides Governance Consultancy Services that bring all aspects of Governance, Risk and Compliance together to address emergent strategic risks, enabling Directors and Trustees to confidently discharge their responsibilities and make for a more effective Board.
Through the Governance Consultancy Service offering, Sandeep’s team can assist your organisation by:
• Supporting, implementing and creating robust governance cultures in small, medium and large organisations.
• Establishing purpose, value and strategy to ensure cultural alignment.
• Guiding management focus on the framework of prudent and effective internal controls
• Helping and guiding in the assessment and management of various corporate and commercial risks.
• Writing, developing and guiding policies, procedures and practices to assist in the management of internal control to safeguard the corporate assets.
• Dealing with the Governance related interdependencies through active participation in issue resolution.
• Board support.
• Running meetings, and committees and acting as the central point for the sharing of information across committees and boards.
• Acting as company secretary.