Wednesday, July 24, 2019

Innation & Informativeness

 There is no doubt that the board only fulfills its role to shareholders and the management team when it is focused on unlocking performance and unleashing digital potential.

Performances are not just numbers with metrics, they are numbers in context, results related to business goals. Business performance can be affected by numerous factors of which governance is one of them. The corporate board as one of the most crucial governance bodies in the modern enterprise plays an important role in setting digital principles for improving performance management effectiveness and monitoring business performance smoothly.

Good governance can create good performance, especially in the long run: Corporate governance has a great impact on corporate performance, not through governance structure directly, but through good governance behavior. The corporate governance has a direct link to each business and its processes. Not only from the financial results, but also from the involvement and signs being displayed inside the organization, about what guidance, values, and principles governing the company's commercial activities. Effective corporate governance creates effective decision-making system and good controlling system which can assure the corporation’s operation under the correct directions and behaviors correctly. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions on corporate affairs. Corporate governance indicates a relationship with the board, shareholders, management and the stakeholders. If all these parties would perform to the vision and mission of the organization, it would increase the business performance and improve organizational maturity.

Make a fair assessment and get objective perspectives on business performance: Performance is about business growth and achievement. Effective governance must create excellent performance, especially for long-term business growth. The corporate board’s role, in large part, is to make good decisions that enhance the value creation for the organization, They need to focus on the performance of the management team as well as their own performance. In achieving the role as the performance monitor, the board needs to be talented enough to vet strategy, gain an in-depth understanding of what’s blocking business achievements, targets, work together as a group to speak in one voice, delegate and monitor business performance they decide not to manage. To identify and break down business performance bottlenecks, they need to help the management understand the whole story behind the scenes and ensure the business as a whole is superior to the sum of pieces. More specifically, performance monitoring is not limited to financial performance only, but also to the firm’s performance in creating value for employees and customers. The "performance" responsibility of BoDs should be focused on the maximization of the business capital allocation and improvement of the shareholder’s value. Ultimately, the board takes the praise or the blame depending largely on their ability to influence the business outcomes.

High-performing boards set goals for their own performance and regularly evaluate how they are performing as the board and where are the board’s performance bottleneck: As far as evaluating the performance of the board, many boards are evaluating their performance at both collective and individual levels. Individually, even the majority of BoDs are senior executives, they need to break down the “status quo,” and present learning agility. They should frequently brainstorm issues such as board composition, structures, and leadership, take the periodic assessment of performance and leadership effectiveness. Competent board directors present dynamic leadership, strategic thinking, persuasiveness, and mentorship skills. Collectively, the digital board with a blend of great expertise and capabilities can improve the board leadership effectiveness significantly. 

There’s a correlation between corporate governance and business performance, and there's a clear connection between bad governance and poor performance. There is no doubt that the board only fulfills its role to shareholders and the management team when it is focused on unlocking performance and unleashing digital potential. A highly effective board enables and directs management towards good outcomes, and ensure the business is on the right track to reach well-defined business goals.


Good blog posting by the author
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