LEGAL
By Sandeep Nighoskar
IT’S TIME TO EVOLVE YOUR CORPORATE GOVERNANCE TO ENHANCE THE REPUTATION OF YOUR COMPANY 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
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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: n D oes the organisation behave in a socially responsible manner when trying to meet its corporate objectives? n Are the existing structures, processes, procedures and controls capable of meeting the growth and compliance challenges of the future? n 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.
