Governance as an
enabling discipline


Corporate Governance as a professional discipline has over recent decades been subject to numerous influences being pulled and pushed in every direction even influenced by directional legislation. Gone are the days when a corporate “Mission Statement” was viewed as the guiding light which all corporate wisdom would be asked to worship.

Gradually Governance as a discipline (even though the concepts had been around for years) began to be accepted by most serious professional business practitioners and leading corporate thinkers as an enabling vehicle which if structured correctly would provide a platform for determining sound corporate behaviour and structured decision making focused on ensuring  the success and well being of the company.

Over the years I’ve read and worked with boards on numerous governance documents and it’s interesting to note the maturing of the discipline as it morphed from Mission Statement through various stages of re incarnations such as the so called “Statement of Corporate Intent” phase, to today where the governance document and its inherent disciplines are considered mandatory to ensuring company leadership processes. Most directors accept that a soundly based and structured governance document is one of the most significant discipline and corporate behavioural enablers that supports and influences decision making while at the same time enhances important strategic implementation thus significantly contributing to a company’s success.

As the governance discipline has in the past continually changed its shape and matured there is no doubt it will continue to do so as the winds of change in the corporate world blow across the business community. It needs to be remembered that governance as a discipline is a living breathing entity which continually requires stroking and attention otherwise it will stagnate and lose its ability to be one of the prime enablers contributing to above average board performance.

Therefore it is my opinion that at present there is a very real risk that governance as a discipline has in a very broad sense begun to lose focus on its prime purpose. As a result it risks being relegated in status to a simple process driven ideology rather than an enabler to address future pressures and provide the structured platform required to meet new challenges and directional changes required by today’s market. Let me explain.

Most current governance documents remain relatively silent on the key issue of structured shareholder communication (other than the AGM).  Yet as we’ve seen from the growing influence of the shareholder pressure and activist groups this is an issue which won’t go away and is becoming in some cases a festering wound demanding a considerable amount of time by boards and executives plus in some cases considerable costs in legal fees. Now it is my contention that within the governance document under the heading communication there should be a highlighted section on how the board will manage shareholder communication plus detailing a two way dialog procedure between the parties. Such detail on this extremely important issue will ensure the governance discipline can fulfil its purpose as a high level corporate enabler by providing a structured communication bridge between shareholder/ investors and the board. Naturally there would need to be discussions with the major shareholders and agreement reached on the formatted structure but having this process agreed, recorded and detailed in the governance document would certainly  take the distrust out of the current argument which pervades some share holder board debates. In addition it cements in place the role of the governance discipline as a high level enabler towards achieving corporate excellence.

I appreciate that some readers will not agree that the governance discipline is designed nor the place to address shareholder board problems. I’ve seen some commentators suggest that changes in the companies’ “Articles of Association” need to occur to resolve shareholder board disputes. However this appears to me to be a sledge hammer driving a drawing pin when if covered with real purpose in the governance document the resulting platform should be sufficient to engender real harmony and a sense of combined purpose between shareholders and directors.

My final comment may not sit well with some business professionals.  Nevertheless it is my belief that some boards have assumed a position of almost arrogance and conferred self importance upon themselves conveniently forgetting that they are accountable to the shareholder/investors. Further I believe through the judicious application of the governance discipline this balance of responsibility and accountability can be restored and shareholders/investors are respected as the ultimate stakeholders in any company structure.

As the governance discipline has in the past continually changed its shape and matured there is no doubt it will continue to do so as the winds of change in the corporate world blow across the business community.

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