The flavor of GRC practices depends on the nature of the business and the level of the organizational maturity.
The possible governance principles, methods, techniques, structures, etc., is based on the design of a management system which generally has a strong process element and the manner in which those management systems mesh with the governance arrangements and practices.
In most of the organizations, there are clear processes for the interaction between management and the board, but with "VUCA" new normal, in some circumstances, the line between management and governance is blurred, Thus, corporate board and management need to work more collaboratively for reinventing governance model, re-imagining management discipline, as well as rejuvenating their relationships to build high performance organization for adapting to change.
Strategy and policies, together with monitoring of management in its realization of the required performance and conformance: Corporate board oversees strategy and co-set business policies to drive desired changes or the large scale business transformation. In a high mature organization, governance must be viewed and assessed at the enterprise level, developing innovative governance practices and achieving governance holism. The corporate board needs to clarify by pondering: How does the organization ensure policy coherence across the portfolio? Are those policies that encourage performance actually coherent with those rules that enhance conformance? Is policy-making and governance effective enough to improve multifaceted value creation of the company? To what extent and how does the corporate planning align corporate priorities, sector business plans, and resource allocations? Do senior management committees make informed, proactive and timely decisions to achieve desired results? Etc.
In practice, the Board of Directors and “policy committee” co-set policies, oversee and monitor the varying alignment and progress against Strategy, Plan, and Policy. They do not participate in the day-to-day operation of the organization, but oversee and monitor business performance and conformance. They prioritize their effort based on the strategic direction of the organization, coherence of organizational decisions at the levels of hierarchy, collaboration of business functions, partnership, alliance, etc. With a set of good principles or policies and strong governance discipline, business management can translate strategy into operational terms aligning the organizational processes and structures to create synergies and synchronize organizational thoughts, actions or behaviors to mobilize changes consistently.
Assess performance and conformance qualitatively and quantitatively and gain an in-depth understanding of what’s blocking achievements: From top down, trust but monitor. Corporate boards need to make a fair assessment and get objective perspectives on business performance, and gain an in-depth understanding of what’s blocking achievements, targets by measuring business results tangibly. The top metrics which are of interest to top executives and BoDs are return on investment/equity, or business growth performance indicators, etc. Actively monitoring of management for transparency and analysis of potential long-term consequences must become the agenda of this hyperconnected and always-on business new normal.
The "performance" responsibility of BoDs should be focused on the maximization of the business capital allocation and improvement of the shareholder’s value, together with monitoring of management in its realization of the required performance and conformance. The conformance duty of the corporate board should be focused on meeting the updated regulations or industrial standards, or taking step further, upgrading standards/best practices/maturity models of their vertical sectors, etc. Ultimately, the board takes the praise or the blame depending largely on their ability to influence the business outcomes - both hard numbers and soft success factors such as leadership, communication, culture, etc.
Enhance accountability via effective delegation of authority or power and people-centric processes/systems: For adapting to high velocity and rapid change, organizations today need to be nimble and resilient. Thus, governance discipline and processes have to become more information-based, lightweight, continuous, and that focus more on results and adapt to changes rather than static plans. There are also some structural issues with accountability. If one is to hold another accountable (peer or subordinate) for achieving some result, there is a set of conditions that must be fulfilled in advance on the "receiver" side. Strong governance enhances the culture of accountability and reengineering processes to enhance accountability. It contributes to designing an organic performance management system that encourages leadership delegation, autonomy and accountability. If you ensure the individuals have autonomy within their tasks or projects, you will be able to address performance on an equal partnership basis.
Most problems are systemic and require systemic solutions where people take accountability for their part in describing and solving them. True accountability focuses on learning and improving. At the strategic level, corporate boards hold management accountable for business performance, and the stakeholders hold the board and the management team accountable for the effectiveness of the direction, the oversight provided, and for the timeliness and caliber of action taken by the governing body. Corporate brand and reputation are the unique soft assets of the companies. It’s leaders’ co-responsibility to manage risks, enhance public relationships and keep expanding the growth cycle for business renewal.
The flavor of GRC practices depends on the nature of the business and the level of the organizational maturity. The BoD must see through the governance system that anything and everything that has to do with the preparation and communication will preserve the company's reputation and further nurture it...to run a high performance, purpose-led organization.
Strategy and policies, together with monitoring of management in its realization of the required performance and conformance: Corporate board oversees strategy and co-set business policies to drive desired changes or the large scale business transformation. In a high mature organization, governance must be viewed and assessed at the enterprise level, developing innovative governance practices and achieving governance holism. The corporate board needs to clarify by pondering: How does the organization ensure policy coherence across the portfolio? Are those policies that encourage performance actually coherent with those rules that enhance conformance? Is policy-making and governance effective enough to improve multifaceted value creation of the company? To what extent and how does the corporate planning align corporate priorities, sector business plans, and resource allocations? Do senior management committees make informed, proactive and timely decisions to achieve desired results? Etc.
In practice, the Board of Directors and “policy committee” co-set policies, oversee and monitor the varying alignment and progress against Strategy, Plan, and Policy. They do not participate in the day-to-day operation of the organization, but oversee and monitor business performance and conformance. They prioritize their effort based on the strategic direction of the organization, coherence of organizational decisions at the levels of hierarchy, collaboration of business functions, partnership, alliance, etc. With a set of good principles or policies and strong governance discipline, business management can translate strategy into operational terms aligning the organizational processes and structures to create synergies and synchronize organizational thoughts, actions or behaviors to mobilize changes consistently.
Assess performance and conformance qualitatively and quantitatively and gain an in-depth understanding of what’s blocking achievements: From top down, trust but monitor. Corporate boards need to make a fair assessment and get objective perspectives on business performance, and gain an in-depth understanding of what’s blocking achievements, targets by measuring business results tangibly. The top metrics which are of interest to top executives and BoDs are return on investment/equity, or business growth performance indicators, etc. Actively monitoring of management for transparency and analysis of potential long-term consequences must become the agenda of this hyperconnected and always-on business new normal.
The "performance" responsibility of BoDs should be focused on the maximization of the business capital allocation and improvement of the shareholder’s value, together with monitoring of management in its realization of the required performance and conformance. The conformance duty of the corporate board should be focused on meeting the updated regulations or industrial standards, or taking step further, upgrading standards/best practices/maturity models of their vertical sectors, etc. Ultimately, the board takes the praise or the blame depending largely on their ability to influence the business outcomes - both hard numbers and soft success factors such as leadership, communication, culture, etc.
Enhance accountability via effective delegation of authority or power and people-centric processes/systems: For adapting to high velocity and rapid change, organizations today need to be nimble and resilient. Thus, governance discipline and processes have to become more information-based, lightweight, continuous, and that focus more on results and adapt to changes rather than static plans. There are also some structural issues with accountability. If one is to hold another accountable (peer or subordinate) for achieving some result, there is a set of conditions that must be fulfilled in advance on the "receiver" side. Strong governance enhances the culture of accountability and reengineering processes to enhance accountability. It contributes to designing an organic performance management system that encourages leadership delegation, autonomy and accountability. If you ensure the individuals have autonomy within their tasks or projects, you will be able to address performance on an equal partnership basis.
Most problems are systemic and require systemic solutions where people take accountability for their part in describing and solving them. True accountability focuses on learning and improving. At the strategic level, corporate boards hold management accountable for business performance, and the stakeholders hold the board and the management team accountable for the effectiveness of the direction, the oversight provided, and for the timeliness and caliber of action taken by the governing body. Corporate brand and reputation are the unique soft assets of the companies. It’s leaders’ co-responsibility to manage risks, enhance public relationships and keep expanding the growth cycle for business renewal.
The flavor of GRC practices depends on the nature of the business and the level of the organizational maturity. The BoD must see through the governance system that anything and everything that has to do with the preparation and communication will preserve the company's reputation and further nurture it...to run a high performance, purpose-led organization.
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