Governance... more than just oil in the machine?

To quote Peter Swabey, Policy and Research Director at ICSA: The Governance Institute, “Every organisation has governance – it’s just that many don’t think of it as such, and they conflate it with bureaucracy.”

Being aware of the corporate governance is the beginning of making that governance value adding as well as ensuring compliance. As Peter goes on to explain, for company secretaries it’s about raising their profile through value adding behaviours. And of course, if the company secretary, or any other person in a governance role, is adding value, the value of the company as a whole is increased.

Perhaps some personnel consider governance to be a ‘neutral’ role, a sort of invisible default activity that only becomes overly apparent in its absence. Bad governance, including the absence of it, can make the news for all the wrong reasons. Good governance is like the oil in the machine, making sure everything runs smoothly and nothing blows up. It’s a defensive role, preventative medicine for the organisation.

But perhaps there’s more to it than that...

Let’s look at a few ways positive value, rather than defensive value, can be added by those in a governance role. As Peter reminds us:

“... the need to focus on strategy, governance and leadership has increased and is increasing.”

Strategy, or rather strategies. An organisation will have many. A strategy for growth, a strategy for diversification of offerings, a strategy for digital transformation, a strategy for employee equality, a strategy for environmental benefits, and dare one say it, a strategy for Brexit, to name a few. These strategies could include acquisitions or disposals of assets, recruitment practices, technology implementations, and supply line audits. Each of these sub strategies ‘should’ align with the organisations overall strategy, and importantly, the means by which these strategies are implemented ‘should’, ideally, support the other sub strategies. Or at very least not hinder them. So what does this mean in practice?

As an example, poor Governance might allow for a short term growth strategy that works at the expense of the environmental strategy. This then creates a liability that quickly undoes the progress made, and then some.

Good Governance might approve a growth strategy that offsets the impact on the environment, satisfying both criteria, achieving a ‘neutral impact’ in the process.

Great Governance will always endeavour to create a multiple wins, and is willing to take the lead to achieve it, and so might propose a growth strategy that partners with an environmental charity, the aim of which is to add additional value to all parties involved, and to have a net positive impact. The ability to see like this is one of the fundamental advantages a strategic company secretary has.

The sales director will focus on sales. The HR director will focus on HR. The Comms director may have environmental impact in their remit. Each will be quite narrowly focussed on their roles and outcomes.

A Company Secretary responsible for governance has the ability to engage with all of these departments, indeed they have to in order to ensure compliance within each. (See the previous article on Governance By Wandering Around.)

By having an overview of the desired outcomes for each department, and a unique perception of how the departments interact with each other, the company secretary is actually in an excellent position to envisage cross departmental strategies.

They’re also in a distinctly independent and unbiased position, having no preference or leaning towards any particular department.

It starts with an attitude that extends governance from a ‘maintenance and compliance’ role into a more active and dynamic development role.

As Peter put it, “We all need to think commercially and use our skills to deliver the company’s strategy whilst still remaining true to our core values.”

For Company Secretaries, this is a job enhancing challenge; engage with the organisation on a deeper and broader basis, find and envision those opportunities that benefit the entire organisation, and make those perfect adjustments and improvements to system architecture.

Start small, aim big.