The characteristics of digital business are interdependent, dynamic, volatile, uncertain, hypercompetitive, and people-centric. It requires interdisciplinary management practices and high-level GRC maturity.
At the Board level, it requires a strategic and forward-looking perspective, to deal in “VUCA” new normal, “think the unthinkable,” "see invisible," "listen to not being said," “ask the unpalatable question,” and explore the people dimension of GRC to accelerate business performance and maturity.
Strategic – enrichment, empowerment, etc: Digital organizations generally consist of varying intersecting and interacting systems that can be perceived through the lenses of sociology, psychology, anthropology of cultures, economics, organizational and communication sciences, etc. Corporate governance discipline can fulfill its purpose by providing a structured communication bridge between shareholders/investors and top business leaders. If BoDs and Executive Management teams have an open, inclusive, and innovative culture, they can clearly define the strategy of the enterprise, design an innovative culture, and align organizational behaviors toward achieving goals effortlessly.
High-impactful corporate boards play a crucial role in making good policies or setting principles for encouraging great things to happen easily, understanding the correlation between healthy workplace culture and policy, instilling positive energy, motivating learning, and enforcing strategic enrichment or empowerment. Good policies and strong governance disciplines harness a working environment in which everyone is at the same playing field to follow the same set of rules despite differences in roles/job titles. The technology-based platforms and collaboration tools enable employees to brainstorm and contribute to either strategy or innovation.
Financial – aid in performance resulting in profit increments or talent promotions, etc: The corporate board takes the praise or the blame depending largely on their abilities to govern the company's commercial activities and influence the business outcomes. The board oversees the strategic management of the business. Goals should be clear and attainable, linking strategic key performance indicators to operational performance indicators, and linking individual performance metrics to team performance metrics, etc. One of the most dangerous parts is when the performance system is connected with the motivation system on an operational level, but disconnected from the strategy management. It could drive wrong behaviors across the organization and bring some significant levels of discomfort to employees, then they could be deemed as bad measurements.
Thus, the corporate board’s performance oversight helps to break down silo mentality, build a healthy culture of accountability, and aid in performance resulting in profit increments or talent promotions, etc. The businesses must be alert to the digital dynamic environment, adapt their workforce planning and development strategies to ensure their digital workforce is highly engaged, innovative, and transformative. From top-down and bottom-up, regular feedback is a must, and incentives should be comparable to expectation setting and engage more people as advocates in building the momentum.
Operational – increased productivity, consistent delivery, etc: The BoD assumes the dual role of guidance and governance steering, whilst leaving the day-to-day operational management processes and practices in the hands of the C-level executives and holding them accountable and supporting the management team in achieving performance outcomes. A solid governance approach enables the organization to optimize business operation management capacity with a keen eye to grasp growth opportunities, manage risks, and achieve operational excellence.
At the board level, performance monitoring is not limited to financial performance only, but also to the firm’s performance in creating value for employees and customers. The corporate board takes the praise or the blame depending largely on their ability to influence corporate governance which has a direct link to not only financial results, but also signs and tunes being displayed inside the organization, such as accountability, productivity, innovation, consistency, customer satisfaction, etc.
Regulatory – avoid failures, aid in the discharge of regulatory responsibilities, etc: Organizations encounter more risks than ever due to over-complex business dynamics. There are all sorts of risks such as strategic risks, operation risks, innovation risks, expansion risks, or reputation risks, etc. Lacking risk awareness creates more blind spots and performance bottlenecks. Corporate governance discipline can fulfill its purpose as a high-level corporate enabler by providing a structured communication bridge between shareholders/investors and top business leaders such as corporate directors.
Governance, auditing, risk management, regulatory issues, sometimes governance "standards" can be taken too far and become their own bureaucracy. The corporate board’s responsibilities include taking control of the softer issues such as making policy, the strategic thinking of GRC, setting risk appetite, etc, improve business transparency, and fitness. Effective GRC can be used to raise visibility and awareness for many things that are captured at the different levels of the organization, and bring them in front of leadership without the audit or regulatory compliance stamp on them. High mature corporate governance creates an effective decision-making system and a good controlling system which can assure the corporation’s operation under the correct directions and behaviors correctly.
In reality, every organization is at a different level of business maturity, has its own struggles and conflicts. What’s “best” yesterday will not always be the best tomorrow. Thus, digital corporate boards should be able to see further and perceive better than others, reimagine governance and explore people dimension of GRC, in order to steer the business on the thorny journey of the digital paradigm shift, set guidance about what core to preserve, and what future to stimulate progress toward, with the goal to shape a high mature digital organization.
