Supporting & Improving Governance
Assessing Board Effectiveness
Directing an organisation through a Board of Directors or similar structure is more difficult that is commonly perceived. This is even before the constant factors of legislative and regulatory change. It is recommended that each year, the board of an entity should take some time out to review effectiveness so that it can be sure that it continues to be “fit for purpose”. Typically this will cover roles and responsibilities, structures and procedures and also appropriate board behaviours.
The benefits of this approach include time to improve the governance framework in light of new developments; assessing the composition of the board to add required skills, knowledge and experience; identifying training needs; and allowing space to make members more productive. It can also be a time to counterbalance “group think” around the Board table.
Some organisations undertaken this annual assessment internally and this may be adequate to highlight straightforward areas of improvement around the Board table. Every third year, it is generally recommended that this review ought to be externally facilitated. This allows the Board to conduct a more fundamental evaluation relative to other Boards and also deals with any structural issues and concerns in the minds of individual Directors around the table.
An external facilitator’s role is not to sit in judgement on the Board, it is to help the Board come to a more informed and objective view of itself and to allow a more structured process for the concerns of individual Directors to be voiced and dealt with. Undertaking an assessment of Board effectiveness can be a productive way to channel the energies around the Board table after significant issues have arisen and to ensure the maximum amount of learning for the organisation.
This is sensitive work and deserves careful bespoke planning to be of the maximum benefit. It must be strategic in focus and include forward looking elements in its intent. It requires facilitators who are experienced, tactful and constructive. Navigo has a panel of experienced consultants to supports organisations in the conduct of both internal assessments and also externally facilitated reviews.
Improving Governance Processes
Good governance makes a discernible difference to the long term health, if not survival, of most organisations. In recent times, examples of poor governance has led some organisations to irreparable brand damage, serious financial loss and business failure.
Governance is a complex business and its disciplines and tools are often poorly understood and not practiced.
Navigo’s Governance Panel can assist your organisation to assess the elements of it governance and to set about upgrading these to the appropriate standard where they are making a significant contribution to the health of your organisation.
Designing Governance Frameworks
Navigo can help new organisations to design and implement governance frameworks and processes. The requirement to do so arises quite frequently from combinations of businesses or mobilising resources to address new business opportunities or public priorities.
Training and Induction for Directors
Governance structures are generally limited in their effectiveness by the skills and competencies of those charged with governance in the organisation. It is vital therefore that the effectiveness of Directors in particular is enhanced by focused and relevant training in order that Directors can discharge their roles.
Board induction is the initial contact point for this skill building but in the best organisations it continues at periodic intervals and as required right through a Director’s service on the Board. The move from being a manager to a directorship – or from director to chairman – is daunting and is more than a change in title, it is a major change in mindset and responsibility.
Narrow considerations have to be left aside and firmly replaced by matters of corporate strategy and business planning, corporate ethics, legal issues and responsibilities, thus various roles around the Board table combining into an effective structure and the Board working as a team.
Navigo has extensive resources to plan and meet your training need in a tailored way.
Supporting Effective Board Committees
Often important business of the organisation is conducted in committees of the Board. The benefit of an Audit Committee, a Risk Committee, Remuneration Committee and Nominations Committee are recognised by well run businesses.
Whatever the structures, the committees of the Board play a vital role in governance. Establishing, supporting and maintaining these committees makes an important contribution to the overall health of the organisation.
Improving Risk Management
Risk-taking is a fundamental driving force in business and entrepreneurship. However risks and the cost of risk management failures are still often underestimated. Boards, in exercising corporate Governance, should ensure that risks are understood, managed, and, when appropriate, communicated.
In recent years, following the financial crisis, many companies have started to pay more attention to risk management and to broaden out their thinking beyond internal control and audit functions (and primarily the area of financial risk) to take in a broader identification and comprehensive management of risk.
Boards need to consider both financial and non-financial risks, and risk management should encompass both strategic and operational risks. In addition to understanding the approaches and methodologies, Boards of Directors need to have sufficient expertise to understand the risks incurred.
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