Human beings really do have a terrible tendency to over-complicate things. Football is now the most widely played sport on the globe, and it basically involves kicking a ball between two sticks. And yet somehow we have managed to end up with FIFA…..
Speaking of FIFA, ICT have just uploaded the latest instalment of our wonderful 90 second guides to our YouTube channel entitled the “An Introduction to Corporate Governance”, and Corporate Governance is another excellent example of how we, as an industry, have taken a relatively simple concept and over analysed and over complicated it.
The purpose of corporate governance can in fact be summed up very simply; it is to make better decisions. Therefore whilst there may be a regulatory requirement for corporate governance systems and controls (to comply with the Corporate Governance Codes and/or other regulatory requirements) it is in fact an example of that rare and elusive beast, a source of sustainable competitive advantage. And as such it should be one of the very highest priorities of all commercial organisations.
The methodology required to make better decisions is to enable pertinent information to flow effectively. This is simply because you base your decisions upon the information that you have in front of you.
So in the interests of simplicity here are a few practical steps as to how you might begin to improve your organisations corporate governance, and subsequently its decision making.
- Actually define what is a ‘right’ decision for your firm, what does ‘right’ mean and how does help you achieve your strategic objectives?
- Keep the decision making hierarchy as simple as possible. This means empowering individuals and/or committees.
- Remember that effective Corporate Governance is not an end in itself, it is the means to the end of better decision making.
- Likewise Management Information (MI) is of no value unless it facilitates effective decision making.
- Agenda item number one at committee meetings is critical. Review or sign-off the minutes of the last meeting is not good enough! You must confirm that you have done what you have said you would do and that it has had the desired effect. Only then should you move on.
- Oh, and watch the 90 second guide and tell us what you think!
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