Organisations with above average governance earn 20% more than those following the same strategy with a weaker governance framework. Part of the issue has been that governance frameworks are often both inflexible and narrow.
What is needed are governance frameworks that are fit for purpose, loved and followed by staff. This is best achieved by a framework that is relevant to the concerns of key stakeholders and has clear linkages to helping the organisation achieve its objectives.
An easy way to simplify governance is to think about your organisation or project as undergoing a journey from its current state to its target state. Along that journey, there are 3 phases or checkpoints where you need to stop and ask yourself some key questions.
Most organisations focus heavily on the 3rd checkpoint. However, the bigger risks with the most impact are at checkpoints 1 and 2.
If you only focus on the 3rd checkpoint, your organisation may be doing a great job, but at the wrong thing.
The traditional accounting and legal background of those responsible for governance is well suited to identifying and managing the risks during implementation phase reviews. However, strategic and planning reviews require a broader skill set that includes an understanding of:
- Industry trends
- Customer expectations, now and in the future
- Technological innovations that can be leveraged such as Digital and Cloud
- Risks to be managed such as Cyber Security and Data Privacy
Specialist subject matter experts are needed to ensure decisions made at the governance checkpoints are fully informed.
If you would like further information on practical and agile governance frameworks, here are some useful references:
- ASX Principle 7 – Governance requirements for Australian publicly listed companies
- COSO – Framework and guidance on enterprise risk management
- COBIT – IT Governance framework
- King III – Corporate Governance code for listed companies in South Africa
- ISO31000 – International Standard on Risk Management
Alternatively feel free to reach out to our experts in Governance.