Joseph Cuschieri
Governance is the big picture:
Governance refers to the time dedicated in working on your business rather than it. This includes all the systems of checks and balances that are put in place to ensure that the business has an in-built system which manages risk and caters for business continuity, performance management, policies, procedures and making the right calls of judgement. Governance includes all the practices, policies, systems which steers the business in the right direction. Governance focuses on the “big picture” – this includes reviewing performance, risk management, business & strategic planning and oversight of strategic market developments.
If you’re struggling to dedicate time for big picture thinking, you’re not alone. Most of the time, we are absorbed with day to day operations which although important, it derails you from overseeing your business strategically and ensure sound decision making which has an impact on the long-term sustainability of your business. Seeking experts and experienced professionals from outside the business can help in widening your strategic thinking but also in bringing new ideas and approaches to the table.
Setting the tone:
The senior leadership team of any business needs to set the tone for good governance. This effectively means that all decision making processes are communicated well and taken in line with the strategy of the business, its mission, values and vision. Creating an environment of transparency, clear strategic thinking and continuous engagement with stakeholders (internal and external) will definitely help in communicating and instilling the right values across the whole organisation/business. A critical component in setting the tone is to make sure that you have a strong team who upholds and lives by the business’s value set. Creating an environment of responsibility, accountability and honesty coupled with a culture of employee empowerment has a knack of unlocking a business’s potential and take it to the next level.
There is a strong link between good governance and your business performance, hence your bottom line. Research shows that companies which embrace good governance achieve better financial results in the long run.
Benefits of good governance:
A key benefit of good governance is that it provides stability to your business, increases shareholder value, improves performance and enhances the quality of decision making and long-term planning. Investors are more likely to invest in a well governed business which has a clear strategy and organisational system. The following are other benefits which good governance brings to the business:
- Improved financial results and business performance,
- Creation of a competitive edge over competitors,
- Better management of risk helps the business to remain on the right track,
- More understanding of legal obligations and compliance,
- Increased accountability and responsibility – avoids institutionalisation of an organisation,
- Investor attraction.
Evidence of good governance has massive value when it comes to accessing capital markets, bank financing and/or seeking private equity investment. It demonstrates to investors that the business is managed well, transparent and set on the right path for success. The sooner you place good governance at the top of your business agenda, the sooner you’ll start seeing the benefits. Go for it – it works!
